Correlation Between Meta Platforms and Phoenix New

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

Diversification Opportunities for Meta Platforms and Phoenix New

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Meta and Phoenix is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms 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 Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Phoenix New go up and down completely randomly.

Pair Corralation between Meta Platforms and Phoenix New

Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Phoenix New. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 1.15 times less risky than Phoenix New. The stock trades about -0.08 of its potential returns per unit of risk. The Phoenix New Media is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  337.00  in Phoenix New Media on December 30, 2023 and sell it today you would lose (143.00) from holding Phoenix New Media or give up 42.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy10.93%
ValuesDaily Returns

Meta Platforms  vs.  Phoenix New Media

 Performance 
       Timeline  
Meta Platforms 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
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.

Meta Platforms and Phoenix New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meta Platforms and Phoenix New

The main advantage of trading using opposite Meta Platforms and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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 Meta Platforms 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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