Correlation Between Phoenix Materials and Robostar CoLtd

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

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

Diversification Opportunities for Phoenix Materials and Robostar CoLtd

0.32

Correlation Coefficient

Phoenix Materials  Robostar CoLtd

Weak diversification

The 3 months correlation between Phoenix and Robostar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Robostar CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robostar CoLtd and Phoenix Materials 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 Phoenix Materials Co are associated (or correlated) with Robostar CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robostar CoLtd has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Robostar CoLtd go up and down completely randomly.

Pair Corralation between Phoenix Materials and Robostar CoLtd

Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Robostar CoLtd. In addition to that, Phoenix Materials is 1.26 times more volatile than Robostar CoLtd. It trades about -0.06 of its total potential returns per unit of risk. Robostar CoLtd is currently generating about 0.08 per unit of volatility. If you would invest  2,085,000  in Robostar CoLtd on December 25, 2024 and sell it today you would earn a total of  310,000  from holding Robostar CoLtd or generate 14.87% return on investment over 90 days.

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

Phoenix Materials Co  vs.  Robostar CoLtd

Phoenix Materials

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Robostar CoLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Robostar CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robostar CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix Materials and Robostar CoLtd

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

The idea behind Phoenix Materials Co and Robostar CoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.