Correlation Between Security Bank and Lepanto Consolidated
Can any of the company-specific risk be diversified away by investing in both Security Bank 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 Security Bank and Lepanto Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Bank Corp and Lepanto Consolidated Mining, you can compare the effects of market volatilities on Security Bank 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 Security Bank with a short position of Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Lepanto Consolidated.
Diversification Opportunities for Security Bank and Lepanto Consolidated
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Security and Lepanto is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Security Bank 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 Security Bank Corp 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 Security Bank i.e., Security Bank and Lepanto Consolidated go up and down completely randomly.
Pair Corralation between Security Bank and Lepanto Consolidated
Assuming the 90 days trading horizon Security Bank Corp is expected to under-perform the Lepanto Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Security Bank Corp is 1.84 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 0.19 of returns per unit of risk over similar time horizon. If you would invest 7.70 in Lepanto Consolidated Mining on January 22, 2025 and sell it today you would earn a total of 1.10 from holding Lepanto Consolidated Mining or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Security Bank Corp vs. Lepanto Consolidated Mining
Performance |
| Timeline |
| Security Bank Corp |
| Lepanto Consolidated |
Security Bank and Lepanto Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Bank and Lepanto Consolidated
The main advantage of trading using opposite Security Bank and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank 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.| Security Bank vs. BDO Unibank | Security Bank vs. Converge Information Communications | Security Bank vs. Robinsons Retail Holdings | Security Bank vs. Prime Media Holdings |
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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