Correlation Between Philex Mining and BRNPB

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

Diversification Opportunities for Philex Mining and BRNPB

-0.37

Correlation Coefficient

Philex Mining  BRNPB

Very good diversification

The 3 months correlation between Philex and BRNPB is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and BRNPB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRNPB 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 BRNPB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRNPB has no effect on the direction of Philex Mining i.e., Philex Mining and BRNPB go up and down completely randomly.

Pair Corralation between Philex Mining and BRNPB

Assuming the 90 days trading horizon Philex Mining Corp is expected to generate 0.91 times more return on investment than BRNPB. However, Philex Mining Corp is 1.1 times less risky than BRNPB. It trades about -0.06 of its potential returns per unit of risk. BRNPB is currently generating about -0.13 per unit of risk. If you would invest  338.00  in Philex Mining Corp on October 24, 2024 and sell it today you would lose (27.00) from holding Philex Mining Corp or give up 7.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.76%
Values	Daily Returns

Philex Mining Corp  vs.  BRNPB

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 uncertain 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.

BRNPB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRNPB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Philex Mining and BRNPB

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

The idea behind Philex Mining Corp and BRNPB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.