Correlation Between Phinergy and Opal Balance

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

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

Diversification Opportunities for Phinergy and Opal Balance

-0.21

Correlation Coefficient

Phinergy  Opal Balance

Very good diversification

The 3 months correlation between Phinergy and Opal is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Phinergy and Opal Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opal Balance and Phinergy 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 Phinergy are associated (or correlated) with Opal Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opal Balance has no effect on the direction of Phinergy i.e., Phinergy and Opal Balance go up and down completely randomly.

Pair Corralation between Phinergy and Opal Balance

Assuming the 90 days trading horizon Phinergy is expected to generate 1.04 times more return on investment than Opal Balance. However, Phinergy is 1.04 times more volatile than Opal Balance. It trades about 0.01 of its potential returns per unit of risk. Opal Balance is currently generating about 0.0 per unit of risk. If you would invest  61,080  in Phinergy on March 19, 2024 and sell it today you would lose (18,070) from holding Phinergy or give up 29.58% of portfolio value over 90 days.

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

Phinergy  vs.  Opal Balance

Phinergy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phinergy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Phinergy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Opal Balance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opal Balance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Opal Balance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Phinergy and Opal Balance

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

The idea behind Phinergy and Opal Balance 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.