Correlation Between PHOENIX BEVERAGES and PLASTIC INDUSTRY

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

By analyzing existing cross correlation between PHOENIX BEVERAGES LTD and PLASTIC INDUSTRY LTD, you can compare the effects of market volatilities on PHOENIX BEVERAGES and PLASTIC INDUSTRY 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 PHOENIX BEVERAGES with a short position of PLASTIC INDUSTRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHOENIX BEVERAGES and PLASTIC INDUSTRY.

Diversification Opportunities for PHOENIX BEVERAGES and PLASTIC INDUSTRY

0.78

Correlation Coefficient

PHOENIX BEVERAGES  PLASTIC INDUSTRY

Poor diversification

The 3 months correlation between PHOENIX and PLASTIC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PHOENIX BEVERAGES LTD and PLASTIC INDUSTRY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLASTIC INDUSTRY LTD and PHOENIX BEVERAGES 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 PHOENIX BEVERAGES LTD are associated (or correlated) with PLASTIC INDUSTRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLASTIC INDUSTRY LTD has no effect on the direction of PHOENIX BEVERAGES i.e., PHOENIX BEVERAGES and PLASTIC INDUSTRY go up and down completely randomly.

Pair Corralation between PHOENIX BEVERAGES and PLASTIC INDUSTRY

Assuming the 90 days trading horizon PHOENIX BEVERAGES is expected to generate 1.93 times less return on investment than PLASTIC INDUSTRY. But when comparing it to its historical volatility, PHOENIX BEVERAGES LTD is 1.46 times less risky than PLASTIC INDUSTRY. It trades about 0.14 of its potential returns per unit of risk. PLASTIC INDUSTRY LTD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,300  in PLASTIC INDUSTRY LTD on September 15, 2024 and sell it today you would earn a total of  125.00  from holding PLASTIC INDUSTRY LTD or generate 2.91% return on investment over 90 days.

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

PHOENIX BEVERAGES LTD  vs.  PLASTIC INDUSTRY LTD

PHOENIX BEVERAGES LTD

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX BEVERAGES LTD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, PHOENIX BEVERAGES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PLASTIC INDUSTRY LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLASTIC INDUSTRY LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, PLASTIC INDUSTRY displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHOENIX BEVERAGES and PLASTIC INDUSTRY

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

The idea behind PHOENIX BEVERAGES LTD and PLASTIC INDUSTRY LTD 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.