Correlation Between AIM Industrial and Prime Road
Can any of the company-specific risk be diversified away by investing in both AIM Industrial and Prime Road 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 AIM Industrial and Prime Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIM Industrial Growth and Prime Road Power, you can compare the effects of market volatilities on AIM Industrial and Prime Road 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 AIM Industrial with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM Industrial and Prime Road.
Diversification Opportunities for AIM Industrial and Prime Road
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AIM and Prime is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AIM Industrial Growth and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power and AIM Industrial 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 AIM Industrial Growth are associated (or correlated) with Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of AIM Industrial i.e., AIM Industrial and Prime Road go up and down completely randomly.
Pair Corralation between AIM Industrial and Prime Road
Assuming the 90 days trading horizon AIM Industrial is expected to generate 141.08 times less return on investment than Prime Road. But when comparing it to its historical volatility, AIM Industrial Growth is 65.64 times less risky than Prime Road. It trades about 0.02 of its potential returns per unit of risk. Prime Road Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Prime Road Power on September 14, 2024 and sell it today you would lose (39.00) from holding Prime Road Power or give up 62.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIM Industrial Growth vs. Prime Road Power
Performance |
| Timeline |
| AIM Industrial Growth |
| Prime Road Power |
AIM Industrial and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM Industrial and Prime Road
The main advantage of trading using opposite AIM Industrial and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM Industrial position performs unexpectedly, Prime Road 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 Prime Road will offset losses from the drop in Prime Road's long position.| AIM Industrial vs. Amata Summit Growth | AIM Industrial vs. WHA Premium Growth | AIM Industrial vs. Digital Telecommunications Infrastructure | AIM Industrial vs. Quality Houses Property |
| Prime Road vs. BCPG Public | Prime Road vs. Energy Absolute Public | Prime Road vs. Gunkul Engineering Public | Prime Road vs. Gulf Energy Development |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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