Correlation Between Prime Media and Lepanto Consolidated
Can any of the company-specific risk be diversified away by investing in both Prime Media and Lepanto Consolidated 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 Prime Media and Lepanto Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Media Holdings and Lepanto Consolidated Mining, you can compare the effects of market volatilities on Prime Media and Lepanto Consolidated 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 Prime Media with a short position of Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Media and Lepanto Consolidated.
Diversification Opportunities for Prime Media and Lepanto Consolidated
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prime and Lepanto is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Prime Media Holdings and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Prime Media 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 Prime Media Holdings are associated (or correlated) with Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Prime Media i.e., Prime Media and Lepanto Consolidated go up and down completely randomly.
Pair Corralation between Prime Media and Lepanto Consolidated
Assuming the 90 days trading horizon Prime Media Holdings is expected to under-perform the Lepanto Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Prime Media Holdings is 2.05 times less risky than Lepanto Consolidated. The stock trades about -0.22 of its potential returns per unit of risk. The Lepanto Consolidated Mining is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6.80 in Lepanto Consolidated Mining on November 27, 2024 and sell it today you would earn a total of 1.90 from holding Lepanto Consolidated Mining or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Prime Media Holdings vs. Lepanto Consolidated Mining
Performance |
| Timeline |
| Prime Media Holdings |
| Lepanto Consolidated |
Prime Media and Lepanto Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Media and Lepanto Consolidated
The main advantage of trading using opposite Prime Media and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Media position performs unexpectedly, Lepanto Consolidated 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 Lepanto Consolidated will offset losses from the drop in Lepanto Consolidated's long position.| Prime Media vs. Crown Asia Chemicals | Prime Media vs. Asia United Bank | Prime Media vs. Cebu Air Preferred | Prime Media vs. Rizal Commercial Banking |
| Lepanto Consolidated vs. COL Financial Group | Lepanto Consolidated vs. Jollibee Foods Corp | Lepanto Consolidated vs. Crown Asia Chemicals | Lepanto Consolidated vs. Bank of the |
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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