Correlation Between Phoenix New and Groupon

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Can any of the company-specific risk be diversified away by investing in both Phoenix New and Groupon 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 New and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix New Media and Groupon, you can compare the effects of market volatilities on Phoenix New and Groupon 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 New with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix New and Groupon.

Diversification Opportunities for Phoenix New and Groupon

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Phoenix and Groupon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Phoenix New 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 New Media are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Phoenix New i.e., Phoenix New and Groupon go up and down completely randomly.

Pair Corralation between Phoenix New and Groupon

Given the investment horizon of 90 days Phoenix New is expected to generate 44.25 times less return on investment than Groupon. But when comparing it to its historical volatility, Phoenix New Media is 1.29 times less risky than Groupon. It trades about 0.0 of its potential returns per unit of risk. Groupon is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  620.00  in Groupon on December 29, 2023 and sell it today you would earn a total of  662.00  from holding Groupon or generate 106.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Phoenix New Media  vs.  Groupon

 Performance 
       Timeline  
Phoenix New Media 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix New Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Phoenix New reported solid returns over the last few months and may actually be approaching a breakup point.
Groupon 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Groupon are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Groupon may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Phoenix New and Groupon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Phoenix New and Groupon

The main advantage of trading using opposite Phoenix New and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix New position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.
The idea behind Phoenix New Media and Groupon 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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