Correlation Between Koninklijke Philips and Phihong Technology
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Phihong Technology 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 Koninklijke Philips and Phihong Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Phihong Technology Co, you can compare the effects of market volatilities on Koninklijke Philips and Phihong Technology 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 Koninklijke Philips with a short position of Phihong Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Phihong Technology.
Diversification Opportunities for Koninklijke Philips and Phihong Technology
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Koninklijke and Phihong is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Phihong Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phihong Technology and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with Phihong Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phihong Technology has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Phihong Technology go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Phihong Technology
Considering the 90-day investment horizon Koninklijke Philips NV is expected to under-perform the Phihong Technology. But the stock apears to be less risky and, when comparing its historical volatility, Koninklijke Philips NV is 1.55 times less risky than Phihong Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Phihong Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Phihong Technology Co on January 20, 2024 and sell it today you would earn a total of 150.00 from holding Phihong Technology Co or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Phihong Technology Co
Performance |
| Timeline |
| Koninklijke Philips |
| Phihong Technology |
Koninklijke Philips and Phihong Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Phihong Technology
The main advantage of trading using opposite Koninklijke Philips and Phihong Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Phihong Technology 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 Phihong Technology will offset losses from the drop in Phihong Technology's long position.| Koninklijke Philips vs. Agilent Technologies | Koninklijke Philips vs. Illumina | Koninklijke Philips vs. Waters | Koninklijke Philips vs. Thermo Fisher Scientific |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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