Correlation Between SUN and PHOENIX BEVERAGES

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

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

Diversification Opportunities for SUN and PHOENIX BEVERAGES

-0.32

Correlation Coefficient

SUN  PHOENIX BEVERAGES

Very good diversification

The 3 months correlation between SUN and PHOENIX is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIMITED and PHOENIX BEVERAGES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHOENIX BEVERAGES LTD and SUN 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 SUN LIMITED are associated (or correlated) with PHOENIX BEVERAGES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHOENIX BEVERAGES LTD has no effect on the direction of SUN i.e., SUN and PHOENIX BEVERAGES go up and down completely randomly.

Pair Corralation between SUN and PHOENIX BEVERAGES

Assuming the 90 days trading horizon SUN LIMITED is expected to under-perform the PHOENIX BEVERAGES. In addition to that, SUN is 9.43 times more volatile than PHOENIX BEVERAGES LTD. It trades about -0.05 of its total potential returns per unit of risk. PHOENIX BEVERAGES LTD is currently generating about 0.22 per unit of volatility. If you would invest  50,100  in PHOENIX BEVERAGES LTD on September 18, 2024 and sell it today you would earn a total of  4,000  from holding PHOENIX BEVERAGES LTD or generate 7.98% return on investment over 90 days.

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

SUN LIMITED  vs.  PHOENIX BEVERAGES LTD

SUN LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUN LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary 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.

PHOENIX BEVERAGES LTD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX BEVERAGES LTD are ranked lower than 17 (%) 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.

Pair Trading with SUN and PHOENIX BEVERAGES

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

The idea behind SUN LIMITED and PHOENIX BEVERAGES 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.