Correlation Between Newretail and Phoenix Silicon

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

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

Diversification Opportunities for Newretail and Phoenix Silicon

0.08

Correlation Coefficient

Newretail  Phoenix Silicon

Significant diversification

The 3 months correlation between Newretail and Phoenix is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Phoenix Silicon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Silicon Inte and Newretail 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 Newretail Co are associated (or correlated) with Phoenix Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Silicon Inte has no effect on the direction of Newretail i.e., Newretail and Phoenix Silicon go up and down completely randomly.

Pair Corralation between Newretail and Phoenix Silicon

Assuming the 90 days trading horizon Newretail is expected to generate 2.24 times less return on investment than Phoenix Silicon. In addition to that, Newretail is 1.02 times more volatile than Phoenix Silicon International. It trades about 0.09 of its total potential returns per unit of risk. Phoenix Silicon International is currently generating about 0.21 per unit of volatility. If you would invest  13,250  in Phoenix Silicon International on October 9, 2024 and sell it today you would earn a total of  1,050  from holding Phoenix Silicon International or generate 7.92% return on investment over 90 days.

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

Newretail Co  vs.  Phoenix Silicon International

Newretail

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newretail Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newretail showed solid returns over the last few months and may actually be approaching a breakup point.

Phoenix Silicon Inte

Risk-Adjusted Performance

4 of 100

Weak

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

Pair Trading with Newretail and Phoenix Silicon

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

The idea behind Newretail Co and Phoenix Silicon International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.