Correlation Between Axiomtek and Phison Electronics

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

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

Diversification Opportunities for Axiomtek and Phison Electronics

-0.3

Correlation Coefficient

Axiomtek  Phison Electronics

Very good diversification

The 3 months correlation between Axiomtek and Phison is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Axiomtek Co and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison Electronics and Axiomtek 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 Axiomtek Co are associated (or correlated) with Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Axiomtek i.e., Axiomtek and Phison Electronics go up and down completely randomly.

Pair Corralation between Axiomtek and Phison Electronics

Assuming the 90 days trading horizon Axiomtek Co is expected to generate 1.08 times more return on investment than Phison Electronics. However, Axiomtek is 1.08 times more volatile than Phison Electronics. It trades about 0.2 of its potential returns per unit of risk. Phison Electronics is currently generating about 0.02 per unit of risk. If you would invest  8,850  in Axiomtek Co on September 29, 2024 and sell it today you would earn a total of  2,700  from holding Axiomtek Co or generate 30.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Axiomtek Co  vs.  Phison Electronics

Axiomtek

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axiomtek Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Axiomtek showed solid returns over the last few months and may actually be approaching a breakup point.

Phison Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phison Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Phison Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Axiomtek and Phison Electronics

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

The idea behind Axiomtek Co and Phison Electronics 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.