Correlation Between Phoenix Holdings and Aviation Links

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

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

Diversification Opportunities for Phoenix Holdings and Aviation Links

0.87

Correlation Coefficient

Phoenix Holdings  Aviation Links

Very poor diversification

The 3 months correlation between Phoenix and Aviation is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Phoenix Holdings and Aviation Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aviation Links and Phoenix Holdings 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 The Phoenix Holdings are associated (or correlated) with Aviation Links. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aviation Links has no effect on the direction of Phoenix Holdings i.e., Phoenix Holdings and Aviation Links go up and down completely randomly.

Pair Corralation between Phoenix Holdings and Aviation Links

Assuming the 90 days trading horizon The Phoenix Holdings is expected to generate 0.97 times more return on investment than Aviation Links. However, The Phoenix Holdings is 1.03 times less risky than Aviation Links. It trades about 0.34 of its potential returns per unit of risk. Aviation Links is currently generating about 0.28 per unit of risk. If you would invest  401,300  in The Phoenix Holdings on September 26, 2024 and sell it today you would earn a total of  119,500  from holding The Phoenix Holdings or generate 29.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.83%
Values	Daily Returns

The Phoenix Holdings  vs.  Aviation Links

Phoenix Holdings

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Holdings are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Phoenix Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Aviation Links

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aviation Links are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aviation Links sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix Holdings and Aviation Links

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

The idea behind The Phoenix Holdings and Aviation Links 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.