Correlation Between Phoenix Silicon and Information Technology

Can any of the company-specific risk be diversified away by investing in both Phoenix Silicon and Information Technology 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 Information Technology 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 Information Technology Total, you can compare the effects of market volatilities on Phoenix Silicon and Information Technology 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 Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Silicon and Information Technology.

Diversification Opportunities for Phoenix Silicon and Information Technology

-0.24

Correlation Coefficient

Phoenix Silicon  Information Technology

Very good diversification

The 3 months correlation between Phoenix and Information is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Silicon International and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology 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 Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Phoenix Silicon i.e., Phoenix Silicon and Information Technology go up and down completely randomly.

Pair Corralation between Phoenix Silicon and Information Technology

Assuming the 90 days trading horizon Phoenix Silicon International is expected to generate 1.21 times more return on investment than Information Technology. However, Phoenix Silicon is 1.21 times more volatile than Information Technology Total. It trades about 0.01 of its potential returns per unit of risk. Information Technology Total is currently generating about 0.01 per unit of risk. If you would invest  12,600  in Phoenix Silicon International on October 26, 2024 and sell it today you would lose (250.00) from holding Phoenix Silicon International or give up 1.98% 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.  Information Technology Total

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.

Information Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Phoenix Silicon and Information Technology

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

The idea behind Phoenix Silicon International and Information Technology Total 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.