Correlation Between Philex Mining and DMCI Holdings

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

Diversification Opportunities for Philex Mining and DMCI Holdings

0.76

Correlation Coefficient

Philex Mining  DMCI Holdings

Poor diversification

The 3 months correlation between Philex and DMCI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and DMCI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMCI Holdings 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 DMCI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMCI Holdings has no effect on the direction of Philex Mining i.e., Philex Mining and DMCI Holdings go up and down completely randomly.

Pair Corralation between Philex Mining and DMCI Holdings

Assuming the 90 days trading horizon Philex Mining Corp is expected to generate 3.53 times more return on investment than DMCI Holdings. However, Philex Mining is 3.53 times more volatile than DMCI Holdings. It trades about 0.38 of its potential returns per unit of risk. DMCI Holdings is currently generating about 0.18 per unit of risk. If you would invest  274.00  in Philex Mining Corp on December 20, 2024 and sell it today you would earn a total of  441.00  from holding Philex Mining Corp or generate 160.95% return on investment over 90 days.

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

Philex Mining Corp  vs.  DMCI Holdings

Philex Mining Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Philex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

DMCI Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DMCI Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, DMCI Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philex Mining and DMCI Holdings

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

The idea behind Philex Mining Corp and DMCI Holdings 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 Anywhere module to track or share privately all of your investments from the convenience of any device.