Correlation Between Philip Morris and Photon Energy
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Photon Energy 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 Philip Morris and Photon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philip Morris CR and Photon Energy NV, you can compare the effects of market volatilities on Philip Morris and Photon Energy 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 Philip Morris with a short position of Photon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Photon Energy.
Diversification Opportunities for Philip Morris and Photon Energy
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Philip and Photon is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris CR and Photon Energy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photon Energy NV and Philip Morris 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 Philip Morris CR are associated (or correlated) with Photon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photon Energy NV has no effect on the direction of Philip Morris i.e., Philip Morris and Photon Energy go up and down completely randomly.
Pair Corralation between Philip Morris and Photon Energy
Assuming the 90 days trading horizon Philip Morris CR is expected to generate 0.17 times more return on investment than Photon Energy. However, Philip Morris CR is 5.95 times less risky than Photon Energy. It trades about -0.02 of its potential returns per unit of risk. Photon Energy NV is currently generating about -0.22 per unit of risk. If you would invest 1,624,000 in Philip Morris CR on September 1, 2024 and sell it today you would lose (4,000) from holding Philip Morris CR or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris CR vs. Photon Energy NV
Performance |
| Timeline |
| Philip Morris CR |
| Photon Energy NV |
Philip Morris and Photon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Photon Energy
The main advantage of trading using opposite Philip Morris and Photon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Photon Energy 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 Photon Energy will offset losses from the drop in Photon Energy's long position.| Philip Morris vs. Cez AS | Philip Morris vs. MT 1997 AS | Philip Morris vs. Kofola CeskoSlovensko as | Philip Morris vs. HARDWARIO as |
| Photon Energy vs. Vienna Insurance Group | Photon Energy vs. UNIQA Insurance Group | Photon Energy vs. Moneta Money 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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