Correlation Between President Automobile and Prodigy Public
Can any of the company-specific risk be diversified away by investing in both President Automobile and Prodigy Public 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 President Automobile and Prodigy Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Automobile Industries and Prodigy Public, you can compare the effects of market volatilities on President Automobile and Prodigy Public 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 President Automobile with a short position of Prodigy Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and Prodigy Public.
Diversification Opportunities for President Automobile and Prodigy Public
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between President and Prodigy is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and Prodigy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodigy Public and President Automobile 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 President Automobile Industries are associated (or correlated) with Prodigy Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodigy Public has no effect on the direction of President Automobile i.e., President Automobile and Prodigy Public go up and down completely randomly.
Pair Corralation between President Automobile and Prodigy Public
Assuming the 90 days trading horizon President Automobile Industries is expected to under-perform the Prodigy Public. But the stock apears to be less risky and, when comparing its historical volatility, President Automobile Industries is 44.58 times less risky than Prodigy Public. The stock trades about -0.03 of its potential returns per unit of risk. The Prodigy Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Prodigy Public on September 14, 2024 and sell it today you would earn a total of 36.00 from holding Prodigy Public or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
President Automobile Industrie vs. Prodigy Public
Performance |
| Timeline |
| President Automobile |
| Prodigy Public |
President Automobile and Prodigy Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and Prodigy Public
The main advantage of trading using opposite President Automobile and Prodigy Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, Prodigy Public 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 Prodigy Public will offset losses from the drop in Prodigy Public's long position.| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor Public |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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