Correlation Between Manila Mining and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both Manila Mining and Oriental Petroleum 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 Manila Mining and Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Mining Corp and Oriental Petroleum and, you can compare the effects of market volatilities on Manila Mining and Oriental Petroleum 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 Manila Mining with a short position of Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Mining and Oriental Petroleum.
Diversification Opportunities for Manila Mining and Oriental Petroleum
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manila and Oriental is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Manila Mining Corp and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and Manila Mining 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 Manila Mining Corp are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Manila Mining i.e., Manila Mining and Oriental Petroleum go up and down completely randomly.
Pair Corralation between Manila Mining and Oriental Petroleum
Assuming the 90 days trading horizon Manila Mining Corp is expected to under-perform the Oriental Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Manila Mining Corp is 1.71 times less risky than Oriental Petroleum. The stock trades about -0.62 of its potential returns per unit of risk. The Oriental Petroleum and is currently generating about -0.35 of returns per unit of risk over similar time horizon. If you would invest 0.86 in Oriental Petroleum and on September 12, 2024 and sell it today you would lose (0.16) from holding Oriental Petroleum and or give up 18.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 60.0% |
| Values | Daily Returns |
Manila Mining Corp vs. Oriental Petroleum and
Performance |
| Timeline |
| Manila Mining Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Oriental Petroleum and |
Manila Mining and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Mining and Oriental Petroleum
The main advantage of trading using opposite Manila Mining and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Mining position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| Manila Mining vs. Nickel Asia Corp | Manila Mining vs. Atok Big Wedge | Manila Mining vs. Philex Mining Corp | Manila Mining vs. Atlas Consolidated Mining |
| Oriental Petroleum vs. Rizal Commercial Banking | Oriental Petroleum vs. National Reinsurance | Oriental Petroleum vs. Transpacific Broadband Group | Oriental Petroleum vs. Atlas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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