Correlation Between Prime Financial and EP Financial
Can any of the company-specific risk be diversified away by investing in both Prime Financial and EP Financial 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 EP Financial 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 EP Financial Group, you can compare the effects of market volatilities on Prime Financial and EP Financial 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 EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and EP Financial.
Diversification Opportunities for Prime Financial and EP Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prime and EP1 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group 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 EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Prime Financial i.e., Prime Financial and EP Financial go up and down completely randomly.
Pair Corralation between Prime Financial and EP Financial
Assuming the 90 days trading horizon Prime Financial Group is expected to generate 0.94 times more return on investment than EP Financial. However, Prime Financial Group is 1.06 times less risky than EP Financial. It trades about 0.02 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.02 per unit of risk. If you would invest 20.00 in Prime Financial Group on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Prime Financial Group or generate 10.0% 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. EP Financial Group
Performance |
| Timeline |
| Prime Financial Group |
| EP Financial Group |
Prime Financial and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and EP Financial
The main advantage of trading using opposite Prime Financial and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| Prime Financial vs. Audio Pixels Holdings | Prime Financial vs. Iodm | Prime Financial vs. TTG Fintech | Prime Financial vs. Mantle Minerals Limited |
| EP Financial vs. Audio Pixels Holdings | EP Financial vs. Iodm | EP Financial vs. TTG Fintech | EP Financial vs. Mantle Minerals Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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