Correlation Between Phoenix New and JD

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Can any of the company-specific risk be diversified away by investing in both Phoenix New and JD 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 JD 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 JD Inc Adr, you can compare the effects of market volatilities on Phoenix New and JD 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 JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix New and JD.

Diversification Opportunities for Phoenix New and JD

0.32
  Correlation Coefficient

Weak diversification

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

Pair Corralation between Phoenix New and JD

Given the investment horizon of 90 days Phoenix New Media is expected to generate 2.64 times more return on investment than JD. However, Phoenix New is 2.64 times more volatile than JD Inc Adr. It trades about 0.16 of its potential returns per unit of risk. JD Inc Adr is currently generating about 0.21 per unit of risk. If you would invest  146.00  in Phoenix New Media on December 30, 2023 and sell it today you would earn a total of  48.00  from holding Phoenix New Media or generate 32.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Phoenix New Media  vs.  JD Inc Adr

 Performance 
       Timeline  
Phoenix New Media 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix New Media are ranked lower than 7 (%) 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.
JD Inc Adr 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, JD is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Phoenix New and JD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Phoenix New and JD

The main advantage of trading using opposite Phoenix New and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix New position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.
The idea behind Phoenix New Media and JD Inc Adr 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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