Correlation Between Lepanto Consolidated and Premiere Entertainment
Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment, you can compare the effects of market volatilities on Lepanto Consolidated and Premiere Entertainment 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 Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Premiere Entertainment.
Diversification Opportunities for Lepanto Consolidated and Premiere Entertainment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lepanto and Premiere is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment 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 Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Premiere Entertainment go up and down completely randomly.
Pair Corralation between Lepanto Consolidated and Premiere Entertainment
Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the Premiere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Lepanto Consolidated Mining is 1.21 times less risky than Premiere Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Premiere Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Premiere Entertainment on August 29, 2024 and sell it today you would lose (2.00) from holding Premiere Entertainment or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.54% |
| Values | Daily Returns |
Lepanto Consolidated Mining vs. Premiere Entertainment
Performance |
| Timeline |
| Lepanto Consolidated |
| Premiere Entertainment |
Lepanto Consolidated and Premiere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lepanto Consolidated and Premiere Entertainment
The main advantage of trading using opposite Lepanto Consolidated and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Premiere Entertainment 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 Premiere Entertainment will offset losses from the drop in Premiere Entertainment's long position.| Lepanto Consolidated vs. Suntrust Home Developers | Lepanto Consolidated vs. Bank of the | Lepanto Consolidated vs. Asia United Bank | Lepanto Consolidated vs. Union Bank of |
| Premiere Entertainment vs. Concepcion Industrial Corp | Premiere Entertainment vs. Atlas Consolidated Mining | Premiere Entertainment vs. Sun Life Financial | Premiere Entertainment vs. Figaro Coffee 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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