Correlation Between Eastman Kodak and Phihong Technology

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

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

Diversification Opportunities for Eastman Kodak and Phihong Technology

-0.32

Correlation Coefficient

Eastman Kodak  Phihong Technology

Very good diversification

The 3 months correlation between Eastman and Phihong is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Phihong Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phihong Technology and Eastman Kodak 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 Eastman Kodak Co 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 Eastman Kodak i.e., Eastman Kodak and Phihong Technology go up and down completely randomly.

Pair Corralation between Eastman Kodak and Phihong Technology

Given the investment horizon of 90 days Eastman Kodak Co is expected to under-perform the Phihong Technology. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Kodak Co is 1.02 times less risky than Phihong Technology. The stock trades about -0.19 of its potential returns per unit of risk. The Phihong Technology Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,330  in Phihong Technology Co on February 3, 2024 and sell it today you would lose (50.00) from holding Phihong Technology Co or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Eastman Kodak Co  vs.  Phihong Technology Co

Eastman Kodak

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Phihong Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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 fairly stable basic indicators, Phihong Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eastman Kodak and Phihong Technology

The main advantage of trading using opposite Eastman Kodak and Phihong Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak 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.

The idea behind Eastman Kodak Co and Phihong Technology Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.