Correlation Between PHLT and Global Payments

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

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

Diversification Opportunities for PHLT and Global Payments

-0.67

Correlation Coefficient

PHLT  Global Payments

Excellent diversification

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

Pair Corralation between PHLT and Global Payments

Given the investment horizon of 90 days PHLT is expected to under-perform the Global Payments. In addition to that, PHLT is 3.22 times more volatile than Global Payments. It trades about -0.07 of its total potential returns per unit of risk. Global Payments is currently generating about -0.15 per unit of volatility. If you would invest  11,654  in Global Payments on October 8, 2024 and sell it today you would lose (396.00) from holding Global Payments or give up 3.4% of portfolio value over 90 days.

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

PHLT  vs.  Global Payments

PHLT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHLT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Global Payments

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Global Payments displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHLT and Global Payments

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

The idea behind PHLT and Global Payments 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.