Correlation Between Hour Loop and Phonex

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

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

Diversification Opportunities for Hour Loop and Phonex

0.03

Correlation Coefficient

Hour Loop  Phonex

Significant diversification

The 3 months correlation between Hour and Phonex is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and Phonex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phonex Inc and Hour Loop 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 Hour Loop are associated (or correlated) with Phonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phonex Inc has no effect on the direction of Hour Loop i.e., Hour Loop and Phonex go up and down completely randomly.

Pair Corralation between Hour Loop and Phonex

Given the investment horizon of 90 days Hour Loop is expected to generate 1.73 times more return on investment than Phonex. However, Hour Loop is 1.73 times more volatile than Phonex Inc. It trades about 0.07 of its potential returns per unit of risk. Phonex Inc is currently generating about 0.06 per unit of risk. If you would invest  136.00  in Hour Loop on September 16, 2024 and sell it today you would earn a total of  25.00  from holding Hour Loop or generate 18.38% return on investment over 90 days.

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

Hour Loop  vs.  Phonex Inc

Hour Loop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.

Phonex Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phonex Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Phonex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hour Loop and Phonex

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

The idea behind Hour Loop and Phonex Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.