Correlation Between Philip Morris and Ladybug Resource

Can any of the company-specific risk be diversified away by investing in both Philip Morris and Ladybug Resource 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 Philip Morris and Ladybug Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Philip Morris International and Ladybug Resource Group, you can compare the effects of market volatilities on Philip Morris and Ladybug Resource 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 Philip Morris with a short position of Ladybug Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Ladybug Resource.

Diversification Opportunities for Philip Morris and Ladybug Resource

-0.41

Correlation Coefficient

Philip Morris  Ladybug Resource

Very good diversification

The 3 months correlation between Philip and Ladybug is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Ladybug Resource Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladybug Resource and Philip Morris 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 Philip Morris International are associated (or correlated) with Ladybug Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladybug Resource has no effect on the direction of Philip Morris i.e., Philip Morris and Ladybug Resource go up and down completely randomly.

Pair Corralation between Philip Morris and Ladybug Resource

Allowing for the 90-day total investment horizon Philip Morris is expected to generate 11.3 times less return on investment than Ladybug Resource. But when comparing it to its historical volatility, Philip Morris International is 12.01 times less risky than Ladybug Resource. It trades about 0.07 of its potential returns per unit of risk. Ladybug Resource Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Ladybug Resource Group on September 30, 2024 and sell it today you would earn a total of  0.10  from holding Ladybug Resource Group or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Philip Morris International  vs.  Ladybug Resource Group

Philip Morris Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Ladybug Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladybug Resource Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ladybug Resource is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Philip Morris and Ladybug Resource

The main advantage of trading using opposite Philip Morris and Ladybug Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Ladybug Resource 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 Ladybug Resource will offset losses from the drop in Ladybug Resource's long position.

The idea behind Philip Morris International and Ladybug Resource Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.