Correlation Between Phoenix New and Perion Network

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

Diversification Opportunities for Phoenix New and Perion Network

-0.84

Correlation Coefficient

Phoenix New  Perion Network

Pay attention - limited upside

The 3 months correlation between Phoenix and Perion is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and Perion Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perion Network 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 Perion Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perion Network has no effect on the direction of Phoenix New i.e., Phoenix New and Perion Network go up and down completely randomly.

Pair Corralation between Phoenix New and Perion Network

Given the investment horizon of 90 days Phoenix New Media is expected to generate 1.63 times more return on investment than Perion Network. However, Phoenix New is 1.63 times more volatile than Perion Network. It trades about 0.03 of its potential returns per unit of risk. Perion Network is currently generating about -0.07 per unit of risk. If you would invest  209.00  in Phoenix New Media on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Phoenix New Media or generate 16.27% return on investment over 90 days.

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

Phoenix New Media  vs.  Perion Network

Phoenix New Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Perion Network

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Perion Network may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Phoenix New and Perion Network

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

The idea behind Phoenix New Media and Perion Network 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.