Correlation Between Prime Financial and Alto Metals
Can any of the company-specific risk be diversified away by investing in both Prime Financial and Alto 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 Alto 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 Alto Metals, you can compare the effects of market volatilities on Prime Financial and Alto 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 Alto Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and Alto Metals.
Diversification Opportunities for Prime Financial and Alto Metals
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prime and Alto is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and Alto Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alto 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 Alto Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alto Metals has no effect on the direction of Prime Financial i.e., Prime Financial and Alto Metals go up and down completely randomly.
Pair Corralation between Prime Financial and Alto Metals
Assuming the 90 days trading horizon Prime Financial is expected to generate 38.04 times less return on investment than Alto Metals. But when comparing it to its historical volatility, Prime Financial Group is 1.88 times less risky than Alto Metals. It trades about 0.01 of its potential returns per unit of risk. Alto Metals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 7.50 in Alto Metals on August 30, 2024 and sell it today you would earn a total of 1.70 from holding Alto Metals or generate 22.67% 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. Alto Metals
Performance |
| Timeline |
| Prime Financial Group |
| Alto Metals |
Prime Financial and Alto Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and Alto Metals
The main advantage of trading using opposite Prime Financial and Alto Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, Alto 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 Alto Metals will offset losses from the drop in Alto Metals' long position.| Prime Financial vs. Renascor Resources | Prime Financial vs. Venus Metals | Prime Financial vs. Havilah Resources | Prime Financial vs. Asara Resources |
| Alto Metals vs. Northern Star Resources | Alto Metals vs. Evolution Mining | Alto Metals vs. Bluescope Steel | Alto Metals vs. Aneka Tambang Tbk |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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