Correlation Between Philex Mining and Aboitiz Equity

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

By analyzing existing cross correlation between Philex Mining Corp and Aboitiz Equity Ventures, you can compare the effects of market volatilities on Philex Mining and Aboitiz Equity 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 Philex Mining with a short position of Aboitiz Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philex Mining and Aboitiz Equity.

Diversification Opportunities for Philex Mining and Aboitiz Equity

0.71

Correlation Coefficient

Philex Mining  Aboitiz Equity

Poor diversification

The 3 months correlation between Philex and Aboitiz is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Aboitiz Equity Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Equity Ventures and Philex Mining 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 Philex Mining Corp are associated (or correlated) with Aboitiz Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Equity Ventures has no effect on the direction of Philex Mining i.e., Philex Mining and Aboitiz Equity go up and down completely randomly.

Pair Corralation between Philex Mining and Aboitiz Equity

Assuming the 90 days trading horizon Philex Mining Corp is expected to under-perform the Aboitiz Equity. But the stock apears to be less risky and, when comparing its historical volatility, Philex Mining Corp is 1.08 times less risky than Aboitiz Equity. The stock trades about -0.18 of its potential returns per unit of risk. The Aboitiz Equity Ventures is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,540  in Aboitiz Equity Ventures on October 6, 2024 and sell it today you would lose (130.00) from holding Aboitiz Equity Ventures or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Philex Mining Corp  vs.  Aboitiz Equity Ventures

Philex Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philex Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Philex Mining and Aboitiz Equity

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

The idea behind Philex Mining Corp and Aboitiz Equity Ventures 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.