Correlation Between N Citron and Phoenix Materials

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

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

Diversification Opportunities for N Citron and Phoenix Materials

0.86

Correlation Coefficient

N Citron  Phoenix Materials

Very poor diversification

The 3 months correlation between 101400 and Phoenix is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and N Citron 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 N Citron 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 N Citron i.e., N Citron and Phoenix Materials go up and down completely randomly.

Pair Corralation between N Citron and Phoenix Materials

Assuming the 90 days trading horizon N Citron is expected to generate 0.68 times more return on investment than Phoenix Materials. However, N Citron is 1.47 times less risky than Phoenix Materials. It trades about -0.1 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.12 per unit of risk. If you would invest  47,100  in N Citron on September 12, 2024 and sell it today you would lose (5,700) from holding N Citron or give up 12.1% of portfolio value over 90 days.

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

N Citron  vs.  Phoenix Materials Co

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with N Citron and Phoenix Materials

The main advantage of trading using opposite N Citron and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Citron 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 N Citron 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.