Correlation Between Phoenix New and Marcus

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

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

Diversification Opportunities for Phoenix New and Marcus

-0.62

Correlation Coefficient

Phoenix New  Marcus

Excellent diversification

The 3 months correlation between Phoenix and Marcus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and Phoenix New 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 Phoenix New Media are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Phoenix New i.e., Phoenix New and Marcus go up and down completely randomly.

Pair Corralation between Phoenix New and Marcus

Given the investment horizon of 90 days Phoenix New Media is expected to under-perform the Marcus. In addition to that, Phoenix New is 1.46 times more volatile than Marcus. It trades about -0.13 of its total potential returns per unit of risk. Marcus is currently generating about 0.43 per unit of volatility. If you would invest  1,681  in Marcus on August 27, 2024 and sell it today you would earn a total of  522.00  from holding Marcus or generate 31.05% return on investment over 90 days.

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

Phoenix New Media  vs.  Marcus

Phoenix New Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix New Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Marcus

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Marcus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phoenix New and Marcus

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

The idea behind Phoenix New Media and Marcus 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.