Correlation Between Phibro Animal and Powerof Canada

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

By analyzing existing cross correlation between Phibro Animal Health and Power of, you can compare the effects of market volatilities on Phibro Animal and Powerof Canada 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 Phibro Animal with a short position of Powerof Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and Powerof Canada.

Diversification Opportunities for Phibro Animal and Powerof Canada

0.61

Correlation Coefficient

Phibro Animal  Powerof Canada

Poor diversification

The 3 months correlation between Phibro and Powerof is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerof Canada and Phibro Animal 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 Phibro Animal Health are associated (or correlated) with Powerof Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerof Canada has no effect on the direction of Phibro Animal i.e., Phibro Animal and Powerof Canada go up and down completely randomly.

Pair Corralation between Phibro Animal and Powerof Canada

Assuming the 90 days horizon Phibro Animal Health is expected to under-perform the Powerof Canada. In addition to that, Phibro Animal is 2.23 times more volatile than Power of. It trades about 0.0 of its total potential returns per unit of risk. Power of is currently generating about 0.08 per unit of volatility. If you would invest  2,943  in Power of on December 21, 2024 and sell it today you would earn a total of  177.00  from holding Power of or generate 6.01% return on investment over 90 days.

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

Phibro Animal Health  vs.  Power of

Phibro Animal Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phibro Animal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Powerof Canada

Risk-Adjusted Performance

Modest

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

Pair Trading with Phibro Animal and Powerof Canada

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

The idea behind Phibro Animal Health and Power of 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.