Correlation Between Zomato and Phoenix Mills

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

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

Diversification Opportunities for Zomato and Phoenix Mills

0.79

Correlation Coefficient

Zomato  Phoenix Mills

Poor diversification

The 3 months correlation between Zomato and Phoenix is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Zomato Limited and The Phoenix Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Mills and Zomato 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 Zomato Limited are associated (or correlated) with Phoenix Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Mills has no effect on the direction of Zomato i.e., Zomato and Phoenix Mills go up and down completely randomly.

Pair Corralation between Zomato and Phoenix Mills

Assuming the 90 days trading horizon Zomato Limited is expected to generate 0.89 times more return on investment than Phoenix Mills. However, Zomato Limited is 1.12 times less risky than Phoenix Mills. It trades about 0.04 of its potential returns per unit of risk. The Phoenix Mills is currently generating about 0.02 per unit of risk. If you would invest  27,770  in Zomato Limited on September 15, 2024 and sell it today you would earn a total of  1,055  from holding Zomato Limited or generate 3.8% return on investment over 90 days.

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

Zomato Limited  vs.  The Phoenix Mills

Zomato Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zomato Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zomato is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Phoenix Mills

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Mills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Phoenix Mills is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zomato and Phoenix Mills

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

The idea behind Zomato Limited and The Phoenix Mills 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.