Correlation Between PHOENIX BEVERAGES and LUX ISLAND

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

Diversification Opportunities for PHOENIX BEVERAGES and LUX ISLAND

-0.67

Correlation Coefficient

PHOENIX BEVERAGES  LUX ISLAND

Excellent diversification

The 3 months correlation between PHOENIX and LUX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PHOENIX BEVERAGES LTD and LUX ISLAND RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUX ISLAND RESORTS 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 LUX ISLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUX ISLAND RESORTS has no effect on the direction of PHOENIX BEVERAGES i.e., PHOENIX BEVERAGES and LUX ISLAND go up and down completely randomly.

Pair Corralation between PHOENIX BEVERAGES and LUX ISLAND

Assuming the 90 days trading horizon PHOENIX BEVERAGES LTD is expected to generate 0.34 times more return on investment than LUX ISLAND. However, PHOENIX BEVERAGES LTD is 2.98 times less risky than LUX ISLAND. It trades about 0.21 of its potential returns per unit of risk. LUX ISLAND RESORTS is currently generating about -0.1 per unit of risk. If you would invest  50,100  in PHOENIX BEVERAGES LTD on September 15, 2024 and sell it today you would earn a total of  4,000  from holding PHOENIX BEVERAGES LTD or generate 7.98% return on investment over 90 days.

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

PHOENIX BEVERAGES LTD  vs.  LUX ISLAND RESORTS

PHOENIX BEVERAGES LTD

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX BEVERAGES LTD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, PHOENIX BEVERAGES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LUX ISLAND RESORTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUX ISLAND RESORTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PHOENIX BEVERAGES and LUX ISLAND

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

The idea behind PHOENIX BEVERAGES LTD and LUX ISLAND RESORTS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.