Correlation Between Data Storage and Phoenix New

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

Diversification Opportunities for Data Storage and Phoenix New

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Data and Phoenix is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Data Storage Corp and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media and Data Storage 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 Data Storage Corp are associated (or correlated) with Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of Data Storage i.e., Data Storage and Phoenix New go up and down completely randomly.

Pair Corralation between Data Storage and Phoenix New

Given the investment horizon of 90 days Data Storage Corp is expected to generate 0.72 times more return on investment than Phoenix New. However, Data Storage Corp is 1.4 times less risky than Phoenix New. It trades about 0.38 of its potential returns per unit of risk. Phoenix New Media is currently generating about 0.07 per unit of risk. If you would invest  420.00  in Data Storage Corp on December 29, 2023 and sell it today you would earn a total of  344.00  from holding Data Storage Corp or generate 81.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Data Storage Corp  vs.  Phoenix New Media

 Performance 
       Timeline  
Data Storage Corp 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Data Storage unveiled solid returns over the last few months and may actually be approaching a breakup point.
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 inconsistent basic indicators, Phoenix New reported solid returns over the last few months and may actually be approaching a breakup point.

Data Storage and Phoenix New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Data Storage and Phoenix New

The main advantage of trading using opposite Data Storage and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Storage position performs unexpectedly, Phoenix New 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 New will offset losses from the drop in Phoenix New's long position.
The idea behind Data Storage Corp and Phoenix New Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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