Correlation Between Moonbae Steel and Phoenix Materials

Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Phoenix Materials 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 Moonbae Steel and Phoenix Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moonbae Steel and Phoenix Materials Co, you can compare the effects of market volatilities on Moonbae Steel and Phoenix Materials 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 Moonbae Steel with a short position of Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Phoenix Materials.

Diversification Opportunities for Moonbae Steel and Phoenix Materials

0.17

Correlation Coefficient

Moonbae Steel  Phoenix Materials

Average diversification

The 3 months correlation between Moonbae and Phoenix is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and Moonbae Steel 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 Moonbae Steel are associated (or correlated) with Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Phoenix Materials go up and down completely randomly.

Pair Corralation between Moonbae Steel and Phoenix Materials

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 0.83 times more return on investment than Phoenix Materials. However, Moonbae Steel is 1.21 times less risky than Phoenix Materials. It trades about -0.02 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.06 per unit of risk. If you would invest  245,000  in Moonbae Steel on October 8, 2024 and sell it today you would lose (13,000) from holding Moonbae Steel or give up 5.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Moonbae Steel  vs.  Phoenix Materials Co

Moonbae Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonbae Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Phoenix Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Materials Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Moonbae Steel and Phoenix Materials

The main advantage of trading using opposite Moonbae Steel and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.

The idea behind Moonbae Steel and Phoenix Materials Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .