Correlation Between Stellus Capital and Phenixfin

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

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

Diversification Opportunities for Stellus Capital and Phenixfin

0.18

Correlation Coefficient

Stellus Capital  Phenixfin

Average diversification

The 3 months correlation between Stellus and Phenixfin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Phenixfin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phenixfin and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with Phenixfin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phenixfin has no effect on the direction of Stellus Capital i.e., Stellus Capital and Phenixfin go up and down completely randomly.

Pair Corralation between Stellus Capital and Phenixfin

Considering the 90-day investment horizon Stellus Capital Investment is expected to generate 0.52 times more return on investment than Phenixfin. However, Stellus Capital Investment is 1.92 times less risky than Phenixfin. It trades about 0.08 of its potential returns per unit of risk. Phenixfin is currently generating about 0.04 per unit of risk. If you would invest  1,330  in Stellus Capital Investment on September 5, 2024 and sell it today you would earn a total of  46.00  from holding Stellus Capital Investment or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Stellus Capital Investment  vs.  Phenixfin

Stellus Capital Inve

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Phenixfin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phenixfin are ranked lower than 2 (%) 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.

Pair Trading with Stellus Capital and Phenixfin

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

The idea behind Stellus Capital Investment and Phenixfin 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.