Correlation Between Allegroeu and Phonex

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

By analyzing existing cross correlation between Allegroeu SA and Phonex Inc, you can compare the effects of market volatilities on Allegroeu and Phonex 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 Allegroeu with a short position of Phonex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegroeu and Phonex.

Diversification Opportunities for Allegroeu and Phonex

-0.53

Correlation Coefficient

Allegroeu  Phonex

Excellent diversification

The 3 months correlation between Allegroeu and Phonex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and Phonex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phonex Inc and Allegroeu 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 Allegroeu SA are associated (or correlated) with Phonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phonex Inc has no effect on the direction of Allegroeu i.e., Allegroeu and Phonex go up and down completely randomly.

Pair Corralation between Allegroeu and Phonex

Assuming the 90 days horizon Allegroeu SA is expected to under-perform the Phonex. But the pink sheet apears to be less risky and, when comparing its historical volatility, Allegroeu SA is 2.96 times less risky than Phonex. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Phonex Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Phonex Inc on October 20, 2024 and sell it today you would earn a total of  4.00  from holding Phonex Inc or generate 3.96% return on investment over 90 days.

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

Allegroeu SA  vs.  Phonex Inc

Allegroeu SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegroeu SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Phonex Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phonex Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Phonex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Allegroeu and Phonex

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

The idea behind Allegroeu SA and Phonex Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..