Correlation Between Robostar CoLtd and Phoenix Materials

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

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

Diversification Opportunities for Robostar CoLtd and Phoenix Materials

0.32

Correlation Coefficient

Robostar CoLtd  Phoenix Materials

Weak diversification

The 3 months correlation between Robostar and Phoenix is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Robostar CoLtd and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and Robostar CoLtd 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 Robostar CoLtd 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 Robostar CoLtd i.e., Robostar CoLtd and Phoenix Materials go up and down completely randomly.

Pair Corralation between Robostar CoLtd and Phoenix Materials

Assuming the 90 days trading horizon Robostar CoLtd is expected to generate 0.79 times more return on investment than Phoenix Materials. However, Robostar CoLtd is 1.26 times less risky than Phoenix Materials. It trades about 0.08 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  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

Robostar CoLtd  vs.  Phoenix Materials Co

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.

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.

Pair Trading with Robostar CoLtd and Phoenix Materials

The main advantage of trading using opposite Robostar CoLtd and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robostar CoLtd 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 Robostar CoLtd 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.