Correlation Between Philex Mining and Liberty Flour

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

Diversification Opportunities for Philex Mining and Liberty Flour

-0.66

Correlation Coefficient

Philex Mining  Liberty Flour

Excellent diversification

The 3 months correlation between Philex and Liberty is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Liberty Flour Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Flour Mills 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 Liberty Flour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Flour Mills has no effect on the direction of Philex Mining i.e., Philex Mining and Liberty Flour go up and down completely randomly.

Pair Corralation between Philex Mining and Liberty Flour

Assuming the 90 days trading horizon Philex Mining Corp is expected to under-perform the Liberty Flour. But the stock apears to be less risky and, when comparing its historical volatility, Philex Mining Corp is 4.7 times less risky than Liberty Flour. The stock trades about -0.09 of its potential returns per unit of risk. The Liberty Flour Mills is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,350  in Liberty Flour Mills on October 8, 2024 and sell it today you would earn a total of  526.00  from holding Liberty Flour Mills or generate 38.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	64.41%
Values	Daily Returns

Philex Mining Corp  vs.  Liberty Flour Mills

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 unsteady 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.

Liberty Flour Mills

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Flour Mills are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Liberty Flour exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philex Mining and Liberty Flour

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

The idea behind Philex Mining Corp and Liberty Flour Mills 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.