Correlation Between THE PHILIPPINE and Apex Mining

Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Apex Mining 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 THE PHILIPPINE and Apex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THE PHILIPPINE STOCK and Apex Mining Co, you can compare the effects of market volatilities on THE PHILIPPINE and Apex Mining 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 THE PHILIPPINE with a short position of Apex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Apex Mining.

Diversification Opportunities for THE PHILIPPINE and Apex Mining

-0.47

Correlation Coefficient

THE PHILIPPINE  Apex Mining

Very good diversification

The 3 months correlation between THE and Apex is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Apex Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Mining and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with Apex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Mining has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Apex Mining go up and down completely randomly.

Pair Corralation between THE PHILIPPINE and Apex Mining

Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the Apex Mining. But the index apears to be less risky and, when comparing its historical volatility, THE PHILIPPINE STOCK is 1.79 times less risky than Apex Mining. The index trades about -0.08 of its potential returns per unit of risk. The Apex Mining Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  351.00  in Apex Mining Co on December 29, 2024 and sell it today you would earn a total of  158.00  from holding Apex Mining Co or generate 45.01% return on investment over 90 days.

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

THE PHILIPPINE STOCK  vs.  Apex Mining Co

Pair Trading with THE PHILIPPINE and Apex Mining

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

The idea behind THE PHILIPPINE STOCK and Apex Mining Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.