Correlation Between Phoenix Silicon and Tong Hwa

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

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

Diversification Opportunities for Phoenix Silicon and Tong Hwa

-0.05

Correlation Coefficient

Phoenix Silicon  Tong Hwa

Good diversification

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

Pair Corralation between Phoenix Silicon and Tong Hwa

Assuming the 90 days trading horizon Phoenix Silicon International is expected to generate 1.65 times more return on investment than Tong Hwa. However, Phoenix Silicon is 1.65 times more volatile than Tong Hwa Synthetic Fiber. It trades about 0.0 of its potential returns per unit of risk. Tong Hwa Synthetic Fiber is currently generating about -0.08 per unit of risk. If you would invest  12,850  in Phoenix Silicon International on October 25, 2024 and sell it today you would lose (500.00) from holding Phoenix Silicon International or give up 3.89% of portfolio value over 90 days.

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

Phoenix Silicon International  vs.  Tong Hwa Synthetic Fiber

Phoenix Silicon Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Silicon International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Phoenix Silicon is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tong Hwa Synthetic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tong Hwa Synthetic Fiber 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.

Pair Trading with Phoenix Silicon and Tong Hwa

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

The idea behind Phoenix Silicon International and Tong Hwa Synthetic Fiber 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.