Correlation Between Phihong Technology and Koninklijke Philips

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

Diversification Opportunities for Phihong Technology and Koninklijke Philips

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Phihong and Koninklijke is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Phihong Technology Co and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips and Phihong Technology 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 Phihong Technology Co are associated (or correlated) with Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Phihong Technology i.e., Phihong Technology and Koninklijke Philips go up and down completely randomly.

Pair Corralation between Phihong Technology and Koninklijke Philips

Assuming the 90 days trading horizon Phihong Technology Co is expected to under-perform the Koninklijke Philips. In addition to that, Phihong Technology is 1.25 times more volatile than Koninklijke Philips NV. It trades about -0.34 of its total potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.03 per unit of volatility. If you would invest  2,017  in Koninklijke Philips NV on December 29, 2023 and sell it today you would earn a total of  16.00  from holding Koninklijke Philips NV or generate 0.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Phihong Technology Co  vs.  Koninklijke Philips NV

 Performance 
       Timeline  
Phihong Technology 

Risk-Adjusted Performance

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Over the last 90 days Phihong Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Koninklijke Philips 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Koninklijke Philips NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Phihong Technology and Koninklijke Philips Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Phihong Technology and Koninklijke Philips

The main advantage of trading using opposite Phihong Technology and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phihong Technology position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.
The idea behind Phihong Technology Co and Koninklijke Philips NV 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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