Correlation Between Direct Finance and Phoenix Holdings

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

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

Diversification Opportunities for Direct Finance and Phoenix Holdings

0.61

Correlation Coefficient

Direct Finance  Phoenix Holdings

Poor diversification

The 3 months correlation between Direct and Phoenix is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Direct Finance TA and The Phoenix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Holdings and Direct Finance 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 Direct Finance TA are associated (or correlated) with Phoenix Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Holdings has no effect on the direction of Direct Finance i.e., Direct Finance and Phoenix Holdings go up and down completely randomly.

Pair Corralation between Direct Finance and Phoenix Holdings

Assuming the 90 days trading horizon Direct Finance is expected to generate 6.02 times less return on investment than Phoenix Holdings. In addition to that, Direct Finance is 1.21 times more volatile than The Phoenix Holdings. It trades about 0.06 of its total potential returns per unit of risk. The Phoenix Holdings is currently generating about 0.45 per unit of volatility. If you would invest  671,102  in The Phoenix Holdings on April 24, 2025 and sell it today you would earn a total of  463,898  from holding The Phoenix Holdings or generate 69.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.96%
Values	Daily Returns

Direct Finance TA  vs.  The Phoenix Holdings

Direct Finance TA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Finance TA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Direct Finance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Phoenix Holdings

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Holdings are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Phoenix Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Finance and Phoenix Holdings

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

The idea behind Direct Finance TA and The Phoenix Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.