Correlation Between Lepanto Consolidated and Dito CME
Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Dito CME 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 Lepanto Consolidated and Dito CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lepanto Consolidated Mining and Dito CME Holdings, you can compare the effects of market volatilities on Lepanto Consolidated and Dito CME 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 Lepanto Consolidated with a short position of Dito CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Dito CME.
Diversification Opportunities for Lepanto Consolidated and Dito CME
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lepanto and Dito is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Dito CME Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dito CME Holdings and Lepanto Consolidated 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 Lepanto Consolidated Mining are associated (or correlated) with Dito CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dito CME Holdings has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Dito CME go up and down completely randomly.
Pair Corralation between Lepanto Consolidated and Dito CME
Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to generate 0.61 times more return on investment than Dito CME. However, Lepanto Consolidated Mining is 1.64 times less risky than Dito CME. It trades about -0.2 of its potential returns per unit of risk. Dito CME Holdings is currently generating about -0.15 per unit of risk. If you would invest 8.30 in Lepanto Consolidated Mining on September 1, 2024 and sell it today you would lose (1.40) from holding Lepanto Consolidated Mining or give up 16.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lepanto Consolidated Mining vs. Dito CME Holdings
Performance |
| Timeline |
| Lepanto Consolidated |
| Dito CME Holdings |
Lepanto Consolidated and Dito CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lepanto Consolidated and Dito CME
The main advantage of trading using opposite Lepanto Consolidated and Dito CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Dito CME 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 Dito CME will offset losses from the drop in Dito CME's long position.The idea behind Lepanto Consolidated Mining and Dito CME 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.| Dito CME vs. Metro Retail Stores | Dito CME vs. East West Banking | Dito CME vs. SM Investments Corp | Dito CME vs. Transpacific Broadband Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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