Correlation Between Phihong Technology and Powerstorm Holdings

Can any of the company-specific risk be diversified away by investing in both Phihong Technology and Powerstorm Holdings 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 Phihong Technology and Powerstorm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Phihong Technology Co and Powerstorm Holdings, you can compare the effects of market volatilities on Phihong Technology and Powerstorm Holdings 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 Phihong Technology with a short position of Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phihong Technology and Powerstorm Holdings.

Diversification Opportunities for Phihong Technology and Powerstorm Holdings

-0.58

Correlation Coefficient

Phihong Technology  Powerstorm Holdings

Excellent diversification

The 3 months correlation between Phihong and Powerstorm is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Phihong Technology Co and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings and Phihong Technology 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 Phihong Technology Co are associated (or correlated) with Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of Phihong Technology i.e., Phihong Technology and Powerstorm Holdings go up and down completely randomly.

Pair Corralation between Phihong Technology and Powerstorm Holdings

Assuming the 90 days trading horizon Phihong Technology Co is expected to generate 0.26 times more return on investment than Powerstorm Holdings. However, Phihong Technology Co is 3.88 times less risky than Powerstorm Holdings. It trades about -0.05 of its potential returns per unit of risk. Powerstorm Holdings is currently generating about -0.03 per unit of risk. If you would invest  4,020  in Phihong Technology Co on September 22, 2024 and sell it today you would lose (325.00) from holding Phihong Technology Co or give up 8.08% of portfolio value over 90 days.

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

Phihong Technology Co  vs.  Powerstorm Holdings

Phihong Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phihong Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Powerstorm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerstorm Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Phihong Technology and Powerstorm Holdings

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

The idea behind Phihong Technology Co and Powerstorm Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.