Correlation Between Phoenix Holdings and Aran Research

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

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

Diversification Opportunities for Phoenix Holdings and Aran Research

-0.43

Correlation Coefficient

Phoenix Holdings  Aran Research

Very good diversification

The 3 months correlation between Phoenix and Aran is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Phoenix Holdings and Aran Research and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aran Research and Phoenix Holdings 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 The Phoenix Holdings are associated (or correlated) with Aran Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aran Research has no effect on the direction of Phoenix Holdings i.e., Phoenix Holdings and Aran Research go up and down completely randomly.

Pair Corralation between Phoenix Holdings and Aran Research

Assuming the 90 days trading horizon The Phoenix Holdings is expected to generate 0.86 times more return on investment than Aran Research. However, The Phoenix Holdings is 1.16 times less risky than Aran Research. It trades about 0.29 of its potential returns per unit of risk. Aran Research and is currently generating about -0.03 per unit of risk. If you would invest  506,104  in The Phoenix Holdings on December 30, 2024 and sell it today you would earn a total of  179,996  from holding The Phoenix Holdings or generate 35.57% return on investment over 90 days.

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

The Phoenix Holdings  vs.  Aran Research and

Phoenix Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Phoenix Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Aran Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aran Research and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Phoenix Holdings and Aran Research

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

The idea behind The Phoenix Holdings and Aran Research and 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.