Correlation Between Philex Mining and Benguet Corp

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

Diversification Opportunities for Philex Mining and Benguet Corp

-0.25

Correlation Coefficient

Philex Mining  Benguet Corp

Very good diversification

The 3 months correlation between Philex and Benguet is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Benguet Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benguet Corp A 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 Benguet Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benguet Corp A has no effect on the direction of Philex Mining i.e., Philex Mining and Benguet Corp go up and down completely randomly.

Pair Corralation between Philex Mining and Benguet Corp

Assuming the 90 days trading horizon Philex Mining is expected to generate 1.9 times less return on investment than Benguet Corp. But when comparing it to its historical volatility, Philex Mining Corp is 1.38 times less risky than Benguet Corp. It trades about 0.03 of its potential returns per unit of risk. Benguet Corp A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  342.00  in Benguet Corp A on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Benguet Corp A or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Philex Mining Corp  vs.  Benguet Corp A

Philex Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Benguet Corp A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benguet Corp A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Benguet Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Philex Mining and Benguet Corp

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

The idea behind Philex Mining Corp and Benguet Corp A 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.