Correlation Between PHN Multi and Guru Organic

Can any of the company-specific risk be diversified away by investing in both PHN Multi and Guru Organic 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 PHN Multi and Guru Organic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PHN Multi Style All Cap and Guru Organic Energy, you can compare the effects of market volatilities on PHN Multi and Guru Organic 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 PHN Multi with a short position of Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Guru Organic.

Diversification Opportunities for PHN Multi and Guru Organic

-0.14

Correlation Coefficient

PHN Multi  Guru Organic

Good diversification

The 3 months correlation between PHN and Guru is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of PHN Multi i.e., PHN Multi and Guru Organic go up and down completely randomly.

Pair Corralation between PHN Multi and Guru Organic

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to under-perform the Guru Organic. But the fund apears to be less risky and, when comparing its historical volatility, PHN Multi Style All Cap is 4.5 times less risky than Guru Organic. The fund trades about -0.07 of its potential returns per unit of risk. The Guru Organic Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Guru Organic Energy on December 30, 2024 and sell it today you would earn a total of  44.00  from holding Guru Organic Energy or generate 32.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PHN Multi Style All Cap  vs.  Guru Organic Energy

PHN Multi Style

Risk-Adjusted Performance

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Guru Organic Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guru Organic Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guru Organic displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHN Multi and Guru Organic

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

The idea behind PHN Multi Style All Cap and Guru Organic Energy 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.