Correlation Between Philex Mining and Alliance Select

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

Diversification Opportunities for Philex Mining and Alliance Select

0.08

Correlation Coefficient

Philex Mining  Alliance Select

Significant diversification

The 3 months correlation between Philex and Alliance is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods 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 Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of Philex Mining i.e., Philex Mining and Alliance Select go up and down completely randomly.

Pair Corralation between Philex Mining and Alliance Select

Assuming the 90 days trading horizon Philex Mining Corp is expected to generate 0.79 times more return on investment than Alliance Select. However, Philex Mining Corp is 1.27 times less risky than Alliance Select. It trades about 0.03 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.04 per unit of risk. If you would invest  279.00  in Philex Mining Corp on September 12, 2024 and sell it today you would earn a total of  9.00  from holding Philex Mining Corp or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	48.44%
Values	Daily Returns

Philex Mining Corp  vs.  Alliance Select Foods

Philex Mining Corp

Risk-Adjusted Performance

2 of 100

Insignificant

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.

Alliance Select Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Select Foods 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Philex Mining and Alliance Select

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

The idea behind Philex Mining Corp and Alliance Select Foods 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.