Correlation Between PHOENIX BEVERAGES and CIM FINANCIAL

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

By analyzing existing cross correlation between PHOENIX BEVERAGES LTD and CIM FINANCIAL SERVICES, you can compare the effects of market volatilities on PHOENIX BEVERAGES and CIM FINANCIAL 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 BEVERAGES with a short position of CIM FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHOENIX BEVERAGES and CIM FINANCIAL.

Diversification Opportunities for PHOENIX BEVERAGES and CIM FINANCIAL

0.45

Correlation Coefficient

PHOENIX BEVERAGES  CIM FINANCIAL

Very weak diversification

The 3 months correlation between PHOENIX and CIM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PHOENIX BEVERAGES LTD and CIM FINANCIAL SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIM FINANCIAL SERVICES and PHOENIX BEVERAGES 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 BEVERAGES LTD are associated (or correlated) with CIM FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIM FINANCIAL SERVICES has no effect on the direction of PHOENIX BEVERAGES i.e., PHOENIX BEVERAGES and CIM FINANCIAL go up and down completely randomly.

Pair Corralation between PHOENIX BEVERAGES and CIM FINANCIAL

Assuming the 90 days trading horizon PHOENIX BEVERAGES is expected to generate 34.86 times less return on investment than CIM FINANCIAL. But when comparing it to its historical volatility, PHOENIX BEVERAGES LTD is 21.02 times less risky than CIM FINANCIAL. It trades about 0.34 of its potential returns per unit of risk. CIM FINANCIAL SERVICES is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest  1,250  in CIM FINANCIAL SERVICES on October 8, 2024 and sell it today you would earn a total of  170.00  from holding CIM FINANCIAL SERVICES or generate 13.6% return on investment over 90 days.

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

PHOENIX BEVERAGES LTD  vs.  CIM FINANCIAL SERVICES

PHOENIX BEVERAGES LTD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX BEVERAGES LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, PHOENIX BEVERAGES is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHOENIX BEVERAGES and CIM FINANCIAL

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

The idea behind PHOENIX BEVERAGES LTD and CIM FINANCIAL SERVICES 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.