Correlation Between PH Tech and Next Entertainment

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

By analyzing existing cross correlation between PH Tech Co and Next Entertainment World, you can compare the effects of market volatilities on PH Tech and Next Entertainment 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 PH Tech with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and Next Entertainment.

Diversification Opportunities for PH Tech and Next Entertainment

0.48

Correlation Coefficient

PH Tech  Next Entertainment

Very weak diversification

The 3 months correlation between 239890 and Next is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World and PH Tech 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 PH Tech Co are associated (or correlated) with Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of PH Tech i.e., PH Tech and Next Entertainment go up and down completely randomly.

Pair Corralation between PH Tech and Next Entertainment

Assuming the 90 days trading horizon PH Tech Co is expected to generate 1.11 times more return on investment than Next Entertainment. However, PH Tech is 1.11 times more volatile than Next Entertainment World. It trades about -0.03 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.08 per unit of risk. If you would invest  1,520,000  in PH Tech Co on September 28, 2024 and sell it today you would lose (766,000) from holding PH Tech Co or give up 50.39% of portfolio value over 90 days.

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

PH Tech Co  vs.  Next Entertainment World

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Next Entertainment World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Entertainment World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Next Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PH Tech and Next Entertainment

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

The idea behind PH Tech Co and Next Entertainment World 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.