Correlation Between PHN Multi and Current Water

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

By analyzing existing cross correlation between PHN Multi Style All Cap and Current Water Technologies, you can compare the effects of market volatilities on PHN Multi and Current Water 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 PHN Multi with a short position of Current Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Current Water.

Diversification Opportunities for PHN Multi and Current Water

-0.44

Correlation Coefficient

PHN Multi  Current Water

Very good diversification

The 3 months correlation between PHN and Current is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and Current Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Current Water Techno and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with Current Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Current Water Techno has no effect on the direction of PHN Multi i.e., PHN Multi and Current Water go up and down completely randomly.

Pair Corralation between PHN Multi and Current Water

Assuming the 90 days trading horizon PHN Multi is expected to generate 8.22 times less return on investment than Current Water. But when comparing it to its historical volatility, PHN Multi Style All Cap is 24.31 times less risky than Current Water. It trades about 0.26 of its potential returns per unit of risk. Current Water Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Current Water Technologies on September 13, 2024 and sell it today you would earn a total of  0.50  from holding Current Water Technologies or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

PHN Multi Style All Cap  vs.  Current Water Technologies

PHN Multi Style

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Current Water Techno

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Current Water Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Current Water showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHN Multi and Current Water

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

The idea behind PHN Multi Style All Cap and Current Water Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.