Correlation Between YY and Phoenix New

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

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

Diversification Opportunities for YY and Phoenix New

0.28

Correlation Coefficient

YY  Phoenix New

Modest diversification

The 3 months correlation between YY and Phoenix is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class 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 YY 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 YY Inc Class 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 YY i.e., YY and Phoenix New go up and down completely randomly.

Pair Corralation between YY and Phoenix New

Allowing for the 90-day total investment horizon YY Inc Class is expected to under-perform the Phoenix New. But the stock apears to be less risky and, when comparing its historical volatility, YY Inc Class is 3.41 times less risky than Phoenix New. The stock trades about -0.09 of its potential returns per unit of risk. The Phoenix New Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  192.00  in Phoenix New Media on February 2, 2024 and sell it today you would earn a total of  21.00  from holding Phoenix New Media or generate 10.94% return on investment over 90 days.

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

YY Inc Class  vs.  Phoenix New Media

YY Inc Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, YY 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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix New Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Phoenix New reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YY and Phoenix New

The main advantage of trading using opposite YY and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY 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 YY Inc Class 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.