Correlation Between Prime Financial and Credit Clear
Can any of the company-specific risk be diversified away by investing in both Prime Financial and Credit Clear 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 Credit Clear 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 Credit Clear, you can compare the effects of market volatilities on Prime Financial and Credit Clear 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 Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and Credit Clear.
Diversification Opportunities for Prime Financial and Credit Clear
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prime and Credit is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of Prime Financial i.e., Prime Financial and Credit Clear go up and down completely randomly.
Pair Corralation between Prime Financial and Credit Clear
Assuming the 90 days trading horizon Prime Financial is expected to generate 3.7 times less return on investment than Credit Clear. But when comparing it to its historical volatility, Prime Financial Group is 1.25 times less risky than Credit Clear. It trades about 0.03 of its potential returns per unit of risk. Credit Clear is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Credit Clear on August 26, 2024 and sell it today you would earn a total of 18.00 from holding Credit Clear or generate 94.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Financial Group vs. Credit Clear
Performance |
| Timeline |
| Prime Financial Group |
| Credit Clear |
Prime Financial and Credit Clear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and Credit Clear
The main advantage of trading using opposite Prime Financial and Credit Clear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, Credit Clear 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 Credit Clear will offset losses from the drop in Credit Clear's long position.| Prime Financial vs. Hudson Investment Group | Prime Financial vs. Sonic Healthcare | Prime Financial vs. Singular Health Group | Prime Financial vs. Auctus Alternative Investments |
| Credit Clear vs. Westpac Banking | Credit Clear vs. Ecofibre | Credit Clear vs. iShares Global Healthcare | Credit Clear vs. Adriatic Metals Plc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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