Correlation Between Lepanto Consolidated and Nickel Asia

Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Nickel Asia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lepanto Consolidated and Nickel Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lepanto Consolidated Mining and Nickel Asia Corp, you can compare the effects of market volatilities on Lepanto Consolidated and Nickel Asia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lepanto Consolidated with a short position of Nickel Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Nickel Asia.

Diversification Opportunities for Lepanto Consolidated and Nickel Asia

-0.23

Correlation Coefficient

Lepanto Consolidated  Nickel Asia

Very good diversification

The 3 months correlation between Lepanto and Nickel is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Nickel Asia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Asia Corp and Lepanto Consolidated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lepanto Consolidated Mining are associated (or correlated) with Nickel Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Asia Corp has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Nickel Asia go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Nickel Asia

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to generate 2.19 times more return on investment than Nickel Asia. However, Lepanto Consolidated is 2.19 times more volatile than Nickel Asia Corp. It trades about 0.06 of its potential returns per unit of risk. Nickel Asia Corp is currently generating about -0.1 per unit of risk. If you would invest  6.20  in Lepanto Consolidated Mining on September 24, 2024 and sell it today you would earn a total of  0.60  from holding Lepanto Consolidated Mining or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Nickel Asia Corp

Lepanto Consolidated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lepanto Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nickel Asia Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Asia Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lepanto Consolidated and Nickel Asia

The main advantage of trading using opposite Lepanto Consolidated and Nickel Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Nickel Asia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nickel Asia will offset losses from the drop in Nickel Asia's long position.

The idea behind Lepanto Consolidated Mining and Nickel Asia Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .