Correlation Between Phison Electronics and Sino American

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

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

Diversification Opportunities for Phison Electronics and Sino American

0.6

Correlation Coefficient

Phison Electronics  Sino American

Poor diversification

The 3 months correlation between Phison and Sino is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Phison Electronics and Sino American Silicon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino American Silicon and Phison Electronics 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 Phison Electronics are associated (or correlated) with Sino American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino American Silicon has no effect on the direction of Phison Electronics i.e., Phison Electronics and Sino American go up and down completely randomly.

Pair Corralation between Phison Electronics and Sino American

Assuming the 90 days trading horizon Phison Electronics is expected to generate 1.4 times more return on investment than Sino American. However, Phison Electronics is 1.4 times more volatile than Sino American Silicon Products. It trades about -0.02 of its potential returns per unit of risk. Sino American Silicon Products is currently generating about -0.24 per unit of risk. If you would invest  48,700  in Phison Electronics on September 15, 2024 and sell it today you would lose (2,100) from holding Phison Electronics or give up 4.31% of portfolio value over 90 days.

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

Phison Electronics  vs.  Sino American Silicon Products

Phison Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sino American Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino American Silicon Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Phison Electronics and Sino American

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

The idea behind Phison Electronics and Sino American Silicon Products 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.