Correlation Between Lease IT and Phatra Leasing

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

By analyzing existing cross correlation between Lease IT Public and Phatra Leasing Public, you can compare the effects of market volatilities on Lease IT and Phatra Leasing 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 Lease IT with a short position of Phatra Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lease IT and Phatra Leasing.

Diversification Opportunities for Lease IT and Phatra Leasing

0.93

Correlation Coefficient

Lease IT  Phatra Leasing

Almost no diversification

The 3 months correlation between Lease and Phatra is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lease IT Public and Phatra Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phatra Leasing Public and Lease IT 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 Lease IT Public are associated (or correlated) with Phatra Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phatra Leasing Public has no effect on the direction of Lease IT i.e., Lease IT and Phatra Leasing go up and down completely randomly.

Pair Corralation between Lease IT and Phatra Leasing

Assuming the 90 days trading horizon Lease IT Public is expected to under-perform the Phatra Leasing. In addition to that, Lease IT is 2.96 times more volatile than Phatra Leasing Public. It trades about -0.21 of its total potential returns per unit of risk. Phatra Leasing Public is currently generating about -0.19 per unit of volatility. If you would invest  182.00  in Phatra Leasing Public on September 16, 2024 and sell it today you would lose (22.00) from holding Phatra Leasing Public or give up 12.09% of portfolio value over 90 days.

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

Lease IT Public  vs.  Phatra Leasing Public

Lease IT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lease IT Public 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Phatra Leasing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phatra Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lease IT and Phatra Leasing

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

The idea behind Lease IT Public and Phatra Leasing Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.