Correlation Between Lepanto Consolidated and Robinsons Retail
Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Robinsons Retail 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 Robinsons Retail 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 Robinsons Retail Holdings, you can compare the effects of market volatilities on Lepanto Consolidated and Robinsons Retail 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 Robinsons Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Robinsons Retail.
Diversification Opportunities for Lepanto Consolidated and Robinsons Retail
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lepanto and Robinsons is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Robinsons Retail Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinsons Retail 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 Robinsons Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinsons Retail Holdings has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Robinsons Retail go up and down completely randomly.
Pair Corralation between Lepanto Consolidated and Robinsons Retail
Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to generate 2.69 times more return on investment than Robinsons Retail. However, Lepanto Consolidated is 2.69 times more volatile than Robinsons Retail Holdings. It trades about 0.14 of its potential returns per unit of risk. Robinsons Retail Holdings is currently generating about -0.23 per unit of risk. If you would invest 6.70 in Lepanto Consolidated Mining on November 5, 2024 and sell it today you would earn a total of 0.50 from holding Lepanto Consolidated Mining or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lepanto Consolidated Mining vs. Robinsons Retail Holdings
Performance |
| Timeline |
| Lepanto Consolidated |
| Robinsons Retail Holdings |
Lepanto Consolidated and Robinsons Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lepanto Consolidated and Robinsons Retail
The main advantage of trading using opposite Lepanto Consolidated and Robinsons Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Robinsons Retail 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 Robinsons Retail will offset losses from the drop in Robinsons Retail's long position.The idea behind Lepanto Consolidated Mining and Robinsons Retail 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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