Correlation Between Top Frontier and Lepanto Consolidated

Can any of the company-specific risk be diversified away by investing in both Top Frontier and Lepanto Consolidated 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 Top Frontier and Lepanto Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Top Frontier Investment and Lepanto Consolidated Mining, you can compare the effects of market volatilities on Top Frontier and Lepanto Consolidated 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 Top Frontier with a short position of Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and Lepanto Consolidated.

Diversification Opportunities for Top Frontier and Lepanto Consolidated

-0.16

Correlation Coefficient

Top Frontier  Lepanto Consolidated

Good diversification

The 3 months correlation between Top and Lepanto is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Top Frontier 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 Top Frontier Investment are associated (or correlated) with Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Top Frontier i.e., Top Frontier and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between Top Frontier and Lepanto Consolidated

Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the Lepanto Consolidated. In addition to that, Top Frontier is 1.22 times more volatile than Lepanto Consolidated Mining. It trades about -0.05 of its total potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about 0.03 per unit of volatility. If you would invest  6.70  in Lepanto Consolidated Mining on September 2, 2024 and sell it today you would earn a total of  0.20  from holding Lepanto Consolidated Mining or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Top Frontier Investment  vs.  Lepanto Consolidated Mining

Top Frontier Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lepanto Consolidated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Lepanto Consolidated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Top Frontier and Lepanto Consolidated

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

The idea behind Top Frontier Investment and Lepanto Consolidated Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.