Correlation Between Phoenix and GreenPower

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

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

Diversification Opportunities for Phoenix and GreenPower

-0.57

Correlation Coefficient

Phoenix  GreenPower

Excellent diversification

The 3 months correlation between Phoenix and GreenPower is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Motor Common and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor and Phoenix 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 Motor Common are associated (or correlated) with GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Phoenix i.e., Phoenix and GreenPower go up and down completely randomly.

Pair Corralation between Phoenix and GreenPower

Considering the 90-day investment horizon Phoenix Motor Common is expected to generate 2.56 times more return on investment than GreenPower. However, Phoenix is 2.56 times more volatile than GreenPower Motor. It trades about 0.08 of its potential returns per unit of risk. GreenPower Motor is currently generating about -0.06 per unit of risk. If you would invest  31.00  in Phoenix Motor Common on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Phoenix Motor Common or generate 22.58% return on investment over 90 days.

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

Phoenix Motor Common  vs.  GreenPower Motor

Phoenix Motor Common

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Motor Common are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Phoenix showed solid returns over the last few months and may actually be approaching a breakup point.

GreenPower Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days GreenPower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Phoenix and GreenPower

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

The idea behind Phoenix Motor Common and GreenPower Motor 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.