Correlation Between Bright Kindle and Lepanto Consolidated
Can any of the company-specific risk be diversified away by investing in both Bright Kindle 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 Bright Kindle and Lepanto Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Kindle Resources and Lepanto Consolidated Mining, you can compare the effects of market volatilities on Bright Kindle 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 Bright Kindle with a short position of Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Kindle and Lepanto Consolidated.
Diversification Opportunities for Bright Kindle and Lepanto Consolidated
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bright and Lepanto is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bright Kindle Resources and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Bright Kindle 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 Bright Kindle Resources 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 Bright Kindle i.e., Bright Kindle and Lepanto Consolidated go up and down completely randomly.
Pair Corralation between Bright Kindle and Lepanto Consolidated
Assuming the 90 days trading horizon Bright Kindle Resources is expected to under-perform the Lepanto Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Bright Kindle Resources is 1.05 times less risky than Lepanto Consolidated. The stock trades about -0.18 of its potential returns per unit of risk. The Lepanto Consolidated Mining is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Lepanto Consolidated Mining on November 22, 2024 and sell it today you would earn a total of 1.80 from holding Lepanto Consolidated Mining or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Kindle Resources vs. Lepanto Consolidated Mining
Performance |
| Timeline |
| Bright Kindle Resources |
| Lepanto Consolidated |
Bright Kindle and Lepanto Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Kindle and Lepanto Consolidated
The main advantage of trading using opposite Bright Kindle and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Kindle 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.| Bright Kindle vs. Transpacific Broadband Group | Bright Kindle vs. Sun Life Financial | Bright Kindle vs. Integrated Micro Electronics | Bright Kindle vs. Metro Retail Stores |
| Lepanto Consolidated vs. Crown Asia Chemicals | Lepanto Consolidated vs. Atlas Consolidated Mining | Lepanto Consolidated vs. Philex Mining Corp | Lepanto Consolidated vs. Metro Retail Stores |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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