Correlation Between Phoenix Silicon and Scientech Corp

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

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

Diversification Opportunities for Phoenix Silicon and Scientech Corp

-0.11

Correlation Coefficient

Phoenix Silicon  Scientech Corp

Good diversification

The 3 months correlation between Phoenix and Scientech is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Silicon International and Scientech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientech Corp and Phoenix Silicon 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 Silicon International are associated (or correlated) with Scientech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientech Corp has no effect on the direction of Phoenix Silicon i.e., Phoenix Silicon and Scientech Corp go up and down completely randomly.

Pair Corralation between Phoenix Silicon and Scientech Corp

Assuming the 90 days trading horizon Phoenix Silicon is expected to generate 8.39 times less return on investment than Scientech Corp. But when comparing it to its historical volatility, Phoenix Silicon International is 2.25 times less risky than Scientech Corp. It trades about 0.04 of its potential returns per unit of risk. Scientech Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  26,800  in Scientech Corp on February 2, 2024 and sell it today you would earn a total of  7,900  from holding Scientech Corp or generate 29.48% return on investment over 90 days.

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

Phoenix Silicon International  vs.  Scientech Corp

Phoenix Silicon Inte

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Silicon International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Phoenix Silicon may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Scientech Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scientech Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Scientech Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix Silicon and Scientech Corp

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

The idea behind Phoenix Silicon International and Scientech Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.