Correlation Between Prime Electronics and Est Global
Can any of the company-specific risk be diversified away by investing in both Prime Electronics and Est Global 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 Prime Electronics and Est Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Electronics Satellitics and Est Global Apparel, you can compare the effects of market volatilities on Prime Electronics and Est Global 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 Prime Electronics with a short position of Est Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Electronics and Est Global.
Diversification Opportunities for Prime Electronics and Est Global
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prime and Est is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Prime Electronics Satellitics and Est Global Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Est Global Apparel and Prime Electronics 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 Prime Electronics Satellitics are associated (or correlated) with Est Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Est Global Apparel has no effect on the direction of Prime Electronics i.e., Prime Electronics and Est Global go up and down completely randomly.
Pair Corralation between Prime Electronics and Est Global
Assuming the 90 days trading horizon Prime Electronics Satellitics is expected to under-perform the Est Global. But the stock apears to be less risky and, when comparing its historical volatility, Prime Electronics Satellitics is 1.8 times less risky than Est Global. The stock trades about -0.53 of its potential returns per unit of risk. The Est Global Apparel is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,870 in Est Global Apparel on September 13, 2024 and sell it today you would lose (65.00) from holding Est Global Apparel or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prime Electronics Satellitics vs. Est Global Apparel
Performance |
| Timeline |
| Prime Electronics |
| Est Global Apparel |
Prime Electronics and Est Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Electronics and Est Global
The main advantage of trading using opposite Prime Electronics and Est Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Electronics position performs unexpectedly, Est Global 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 Est Global will offset losses from the drop in Est Global's long position.| Prime Electronics vs. Est Global Apparel | Prime Electronics vs. STL Technology Co | Prime Electronics vs. United Radiant Technology | Prime Electronics vs. Advanced Echem Materials |
| Est Global vs. Eclat Textile Co | Est Global vs. Ruentex Industries | Est Global vs. Shinkong Synthetic Fiber | Est Global vs. Taiwan Paiho |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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