Correlation Between PHI and China Overseas
Can any of the company-specific risk be diversified away by investing in both PHI and China Overseas 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 PHI and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHI Group and China Overseas Land, you can compare the effects of market volatilities on PHI and China Overseas 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 PHI with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHI and China Overseas.
Diversification Opportunities for PHI and China Overseas
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PHI and China is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PHI Group and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and PHI 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 PHI Group are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of PHI i.e., PHI and China Overseas go up and down completely randomly.
Pair Corralation between PHI and China Overseas
Given the investment horizon of 90 days PHI Group is expected to generate 3.6 times more return on investment than China Overseas. However, PHI is 3.6 times more volatile than China Overseas Land. It trades about 0.07 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.01 per unit of risk. If you would invest 0.10 in PHI Group on August 28, 2024 and sell it today you would lose (0.09) from holding PHI Group or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.31% |
| Values | Daily Returns |
PHI Group vs. China Overseas Land
Performance |
| Timeline |
| PHI Group |
| China Overseas Land |
PHI and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHI and China Overseas
The main advantage of trading using opposite PHI and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHI position performs unexpectedly, China Overseas 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 China Overseas will offset losses from the drop in China Overseas' long position.| PHI vs. Morgan Stanley | PHI vs. Goldman Sachs Group | PHI vs. Charles Schwab Corp | PHI vs. Interactive Brokers Group |
| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas vs. Sino Land Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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