Correlation Between Prime Financial and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Prime Financial and ACDC Metals 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 Financial and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Financial Group and ACDC Metals, you can compare the effects of market volatilities on Prime Financial and ACDC Metals 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 Financial with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and ACDC Metals.
Diversification Opportunities for Prime Financial and ACDC Metals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Prime and ACDC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Prime Financial 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 Financial Group are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Prime Financial i.e., Prime Financial and ACDC Metals go up and down completely randomly.
Pair Corralation between Prime Financial and ACDC Metals
Assuming the 90 days trading horizon Prime Financial Group is expected to generate 0.7 times more return on investment than ACDC Metals. However, Prime Financial Group is 1.43 times less risky than ACDC Metals. It trades about 0.03 of its potential returns per unit of risk. ACDC Metals is currently generating about 0.01 per unit of risk. If you would invest 22.00 in Prime Financial Group on September 14, 2024 and sell it today you would earn a total of 2.00 from holding Prime Financial Group or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Financial Group vs. ACDC Metals
Performance |
| Timeline |
| Prime Financial Group |
| ACDC Metals |
Prime Financial and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and ACDC Metals
The main advantage of trading using opposite Prime Financial and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Prime Financial vs. Regis Healthcare | Prime Financial vs. Austco Healthcare | Prime Financial vs. Super Retail Group | Prime Financial vs. My Foodie Box |
| ACDC Metals vs. Centuria Industrial Reit | ACDC Metals vs. Global Data Centre | ACDC Metals vs. Mayfield Childcare | ACDC Metals vs. Aurelia Metals |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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