Correlation Between Philex Mining and Asia United

Can any of the company-specific risk be diversified away by investing in both Philex Mining and Asia United 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 Asia United 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 Asia United Bank, you can compare the effects of market volatilities on Philex Mining and Asia United 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 Asia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philex Mining and Asia United.

Diversification Opportunities for Philex Mining and Asia United

0.03

Correlation Coefficient

Philex Mining  Asia United

Significant diversification

The 3 months correlation between Philex and Asia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank 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 Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of Philex Mining i.e., Philex Mining and Asia United go up and down completely randomly.

Pair Corralation between Philex Mining and Asia United

Assuming the 90 days trading horizon Philex Mining Corp is expected to under-perform the Asia United. In addition to that, Philex Mining is 1.37 times more volatile than Asia United Bank. It trades about -0.01 of its total potential returns per unit of risk. Asia United Bank is currently generating about 0.29 per unit of volatility. If you would invest  4,700  in Asia United Bank on September 14, 2024 and sell it today you would earn a total of  1,550  from holding Asia United Bank or generate 32.98% return on investment over 90 days.

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

Philex Mining Corp  vs.  Asia United Bank

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 rather sound basic indicators, Philex Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Asia United Bank

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asia United Bank are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Asia United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philex Mining and Asia United

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

The idea behind Philex Mining Corp and Asia United Bank 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.