Correlation Between Phenixfin and Stepstone

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

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

Diversification Opportunities for Phenixfin and Stepstone

-0.41

Correlation Coefficient

Phenixfin  Stepstone

Very good diversification

The 3 months correlation between Phenixfin and Stepstone is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Phenixfin and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Phenixfin 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 Phenixfin are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Phenixfin i.e., Phenixfin and Stepstone go up and down completely randomly.

Pair Corralation between Phenixfin and Stepstone

Considering the 90-day investment horizon Phenixfin is expected to generate 0.76 times more return on investment than Stepstone. However, Phenixfin is 1.31 times less risky than Stepstone. It trades about 0.06 of its potential returns per unit of risk. Stepstone Group is currently generating about -0.08 per unit of risk. If you would invest  4,725  in Phenixfin on October 7, 2024 and sell it today you would earn a total of  175.00  from holding Phenixfin or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

Phenixfin  vs.  Stepstone Group

Phenixfin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phenixfin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Phenixfin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stepstone Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Phenixfin and Stepstone

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

The idea behind Phenixfin and Stepstone Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.