Correlation Between Outbrain and Phoenix New

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

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

Diversification Opportunities for Outbrain and Phoenix New

-0.62

Correlation Coefficient

Outbrain  Phoenix New

Excellent diversification

The 3 months correlation between Outbrain and Phoenix is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media and Outbrain 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 Outbrain are associated (or correlated) with Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of Outbrain i.e., Outbrain and Phoenix New go up and down completely randomly.

Pair Corralation between Outbrain and Phoenix New

Allowing for the 90-day total investment horizon Outbrain is expected to generate 0.52 times more return on investment than Phoenix New. However, Outbrain is 1.94 times less risky than Phoenix New. It trades about 0.06 of its potential returns per unit of risk. Phoenix New Media is currently generating about 0.02 per unit of risk. If you would invest  396.00  in Outbrain on September 25, 2024 and sell it today you would earn a total of  355.00  from holding Outbrain or generate 89.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Outbrain  vs.  Phoenix New Media

Outbrain

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Outbrain and Phoenix New

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

The idea behind Outbrain and Phoenix New Media 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.