Correlation Between Phonex and Powerstorm Holdings

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

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

Diversification Opportunities for Phonex and Powerstorm Holdings

-0.3

Correlation Coefficient

Phonex  Powerstorm Holdings

Very good diversification

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

Pair Corralation between Phonex and Powerstorm Holdings

Given the investment horizon of 90 days Phonex Inc is expected to generate 0.36 times more return on investment than Powerstorm Holdings. However, Phonex Inc is 2.74 times less risky than Powerstorm Holdings. It trades about 0.06 of its potential returns per unit of risk. Powerstorm Holdings is currently generating about -0.03 per unit of risk. If you would invest  107.00  in Phonex Inc on October 1, 2024 and sell it today you would earn a total of  10.00  from holding Phonex Inc or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Phonex Inc  vs.  Powerstorm Holdings

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 uncertain technical indicators, Phonex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Powerstorm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerstorm Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Phonex and Powerstorm Holdings

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

The idea behind Phonex Inc and Powerstorm Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.