Correlation Between PHOENIX INVESTMENT and MCB INDIA

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

By analyzing existing cross correlation between PHOENIX INVESTMENT PANY and MCB INDIA SOVEREIGN, you can compare the effects of market volatilities on PHOENIX INVESTMENT and MCB INDIA 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 INVESTMENT with a short position of MCB INDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHOENIX INVESTMENT and MCB INDIA.

Diversification Opportunities for PHOENIX INVESTMENT and MCB INDIA

0.38

Correlation Coefficient

PHOENIX INVESTMENT  MCB INDIA

Weak diversification

The 3 months correlation between PHOENIX and MCB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PHOENIX INVESTMENT PANY and MCB INDIA SOVEREIGN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB INDIA SOVEREIGN and PHOENIX INVESTMENT 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 INVESTMENT PANY are associated (or correlated) with MCB INDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB INDIA SOVEREIGN has no effect on the direction of PHOENIX INVESTMENT i.e., PHOENIX INVESTMENT and MCB INDIA go up and down completely randomly.

Pair Corralation between PHOENIX INVESTMENT and MCB INDIA

Assuming the 90 days trading horizon PHOENIX INVESTMENT PANY is expected to generate 3.0 times more return on investment than MCB INDIA. However, PHOENIX INVESTMENT is 3.0 times more volatile than MCB INDIA SOVEREIGN. It trades about 0.39 of its potential returns per unit of risk. MCB INDIA SOVEREIGN is currently generating about -0.08 per unit of risk. If you would invest  34,400  in PHOENIX INVESTMENT PANY on October 26, 2024 and sell it today you would earn a total of  8,600  from holding PHOENIX INVESTMENT PANY or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

PHOENIX INVESTMENT PANY  vs.  MCB INDIA SOVEREIGN

PHOENIX INVESTMENT PANY

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX INVESTMENT PANY are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, PHOENIX INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

MCB INDIA SOVEREIGN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCB INDIA SOVEREIGN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MCB INDIA is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PHOENIX INVESTMENT and MCB INDIA

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

The idea behind PHOENIX INVESTMENT PANY and MCB INDIA SOVEREIGN 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.