Correlation Between Phibro Animal and China Overseas

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

By analyzing existing cross correlation between Phibro Animal Health and China Overseas Land, you can compare the effects of market volatilities on Phibro Animal and China Overseas 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 Phibro Animal with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and China Overseas.

Diversification Opportunities for Phibro Animal and China Overseas

0.57

Correlation Coefficient

Phibro Animal  China Overseas

Very weak diversification

The 3 months correlation between Phibro and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and Phibro Animal 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 Phibro Animal Health are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Phibro Animal i.e., Phibro Animal and China Overseas go up and down completely randomly.

Pair Corralation between Phibro Animal and China Overseas

Assuming the 90 days horizon Phibro Animal Health is expected to generate 1.25 times more return on investment than China Overseas. However, Phibro Animal is 1.25 times more volatile than China Overseas Land. It trades about 0.19 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.08 per unit of risk. If you would invest  2,110  in Phibro Animal Health on May 31, 2025 and sell it today you would earn a total of  730.00  from holding Phibro Animal Health or generate 34.6% return on investment over 90 days.

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

Phibro Animal Health  vs.  China Overseas Land

Phibro Animal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Phibro Animal reported solid returns over the last few months and may actually be approaching a breakup point.

China Overseas Land

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in China Overseas Land are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Overseas may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Phibro Animal and China Overseas

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

The idea behind Phibro Animal Health and China Overseas Land 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.