Correlation Between National Reinsurance and Philex Mining
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and Philex Mining 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 National Reinsurance and Philex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and Philex Mining Corp, you can compare the effects of market volatilities on National Reinsurance and Philex Mining 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 National Reinsurance with a short position of Philex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and Philex Mining.
Diversification Opportunities for National Reinsurance and Philex Mining
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Philex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp and National Reinsurance 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 National Reinsurance are associated (or correlated) with Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of National Reinsurance i.e., National Reinsurance and Philex Mining go up and down completely randomly.
Pair Corralation between National Reinsurance and Philex Mining
Assuming the 90 days trading horizon National Reinsurance is expected to generate 3.55 times more return on investment than Philex Mining. However, National Reinsurance is 3.55 times more volatile than Philex Mining Corp. It trades about 0.04 of its potential returns per unit of risk. Philex Mining Corp is currently generating about 0.01 per unit of risk. If you would invest 56.00 in National Reinsurance on September 14, 2024 and sell it today you would earn a total of 12.00 from holding National Reinsurance or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.46% |
| Values | Daily Returns |
National Reinsurance vs. Philex Mining Corp
Performance |
| Timeline |
| National Reinsurance |
| Philex Mining Corp |
National Reinsurance and Philex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and Philex Mining
The main advantage of trading using opposite National Reinsurance and Philex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, Philex Mining 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 Philex Mining will offset losses from the drop in Philex Mining's long position.| National Reinsurance vs. GT Capital Holdings | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. LFM Properties Corp |
| Philex Mining vs. Apex Mining Co | Philex Mining vs. Top Frontier Investment | Philex Mining vs. Asia United Bank | Philex Mining vs. Converge Information Communications |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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