Correlation Between Camellia Metal and Phison Electronics

Can any of the company-specific risk be diversified away by investing in both Camellia Metal and Phison Electronics 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 Camellia Metal and Phison Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Camellia Metal and Phison Electronics

0.05

Correlation Coefficient

Camellia Metal  Phison Electronics

Significant diversification

The 3 months correlation between Camellia and Phison is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal Co and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison Electronics and Camellia Metal 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 Camellia Metal Co are associated (or correlated) with Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Camellia Metal i.e., Camellia Metal and Phison Electronics go up and down completely randomly.

Pair Corralation between Camellia Metal and Phison Electronics

Assuming the 90 days trading horizon Camellia Metal Co is expected to under-perform the Phison Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Camellia Metal Co is 1.17 times less risky than Phison Electronics. The stock trades about -0.1 of its potential returns per unit of risk. The Phison Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  47,350  in Phison Electronics on October 7, 2024 and sell it today you would earn a total of  4,650  from holding Phison Electronics or generate 9.82% return on investment over 90 days.

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

Camellia Metal Co  vs.  Phison Electronics

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Phison Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phison Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Phison Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Camellia Metal and Phison Electronics

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

The idea behind Camellia Metal Co and Phison Electronics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.