Correlation Between Lepanto Consolidated and NiHAO Mineral
Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and NiHAO Mineral 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 NiHAO Mineral 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 NiHAO Mineral Resources, you can compare the effects of market volatilities on Lepanto Consolidated and NiHAO Mineral 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 NiHAO Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and NiHAO Mineral.
Diversification Opportunities for Lepanto Consolidated and NiHAO Mineral
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lepanto and NiHAO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and NiHAO Mineral Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiHAO Mineral Resources 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 NiHAO Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiHAO Mineral Resources has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and NiHAO Mineral go up and down completely randomly.
Pair Corralation between Lepanto Consolidated and NiHAO Mineral
Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the NiHAO Mineral. But the stock apears to be less risky and, when comparing its historical volatility, Lepanto Consolidated Mining is 2.46 times less risky than NiHAO Mineral. The stock trades about -0.01 of its potential returns per unit of risk. The NiHAO Mineral Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 47.00 in NiHAO Mineral Resources on September 19, 2024 and sell it today you would lose (3.00) from holding NiHAO Mineral Resources or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.24% |
| Values | Daily Returns |
Lepanto Consolidated Mining vs. NiHAO Mineral Resources
Performance |
| Timeline |
| Lepanto Consolidated |
| NiHAO Mineral Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lepanto Consolidated and NiHAO Mineral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lepanto Consolidated and NiHAO Mineral
The main advantage of trading using opposite Lepanto Consolidated and NiHAO Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, NiHAO Mineral 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 NiHAO Mineral will offset losses from the drop in NiHAO Mineral's long position.| Lepanto Consolidated vs. Atok Big Wedge | Lepanto Consolidated vs. Philex Mining Corp | Lepanto Consolidated vs. Atlas Consolidated Mining | Lepanto Consolidated vs. Lepanto Consolidated Mining |
| NiHAO Mineral vs. Atok Big Wedge | NiHAO Mineral vs. Philex Mining Corp | NiHAO Mineral vs. Atlas Consolidated Mining | NiHAO Mineral vs. Lepanto Consolidated Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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