Correlation Between Phoenix New and Cheetah Mobile

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

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

Diversification Opportunities for Phoenix New and Cheetah Mobile

0.0

Correlation Coefficient

Phoenix New  Cheetah Mobile

Pay attention - limited upside

The 3 months correlation between Phoenix and Cheetah is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile and Phoenix New 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 New Media are associated (or correlated) with Cheetah Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Mobile has no effect on the direction of Phoenix New i.e., Phoenix New and Cheetah Mobile go up and down completely randomly.

Pair Corralation between Phoenix New and Cheetah Mobile

Given the investment horizon of 90 days Phoenix New is expected to generate 12.46 times less return on investment than Cheetah Mobile. But when comparing it to its historical volatility, Phoenix New Media is 1.13 times less risky than Cheetah Mobile. It trades about 0.01 of its potential returns per unit of risk. Cheetah Mobile is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  363.00  in Cheetah Mobile on September 2, 2024 and sell it today you would earn a total of  215.00  from holding Cheetah Mobile or generate 59.23% return on investment over 90 days.

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

Phoenix New Media  vs.  Cheetah Mobile

Phoenix New Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix New Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Phoenix New is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cheetah Mobile

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Mobile are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cheetah Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix New and Cheetah Mobile

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

The idea behind Phoenix New Media and Cheetah Mobile 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.

Check out your portfolio center.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.