Correlation Between RF Materials and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both RF Materials and Phoenix Materials 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 RF Materials and Phoenix Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Materials Co and Phoenix Materials Co, you can compare the effects of market volatilities on RF Materials and Phoenix Materials 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 RF Materials with a short position of Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and Phoenix Materials.
Diversification Opportunities for RF Materials and Phoenix Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 327260 and Phoenix is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and RF Materials 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 RF Materials Co are associated (or correlated) with Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of RF Materials i.e., RF Materials and Phoenix Materials go up and down completely randomly.
Pair Corralation between RF Materials and Phoenix Materials
Assuming the 90 days trading horizon RF Materials Co is expected to under-perform the Phoenix Materials. But the stock apears to be less risky and, when comparing its historical volatility, RF Materials Co is 1.54 times less risky than Phoenix Materials. The stock trades about -0.05 of its potential returns per unit of risk. The Phoenix Materials Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 186,400 in Phoenix Materials Co on September 2, 2024 and sell it today you would lose (116,900) from holding Phoenix Materials Co or give up 62.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.28% |
| Values | Daily Returns |
RF Materials Co vs. Phoenix Materials Co
Performance |
| Timeline |
| RF Materials |
| Phoenix Materials |
RF Materials and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and Phoenix Materials
The main advantage of trading using opposite RF Materials and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, Phoenix Materials 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 Materials will offset losses from the drop in Phoenix Materials' long position.| RF Materials vs. SK Hynix | RF Materials vs. LX Semicon Co | RF Materials vs. People Technology | RF Materials vs. SIMMTECH Co |
| Phoenix Materials vs. Dongsin Engineering Construction | Phoenix Materials vs. Doosan Fuel Cell | Phoenix Materials vs. Daishin Balance 1 | Phoenix Materials vs. Total Soft Bank |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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