Correlation Between Prime Financial and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Prime Financial and Finexia 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 Finexia 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 Finexia Financial Group, you can compare the effects of market volatilities on Prime Financial and Finexia 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 Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and Finexia Financial.
Diversification Opportunities for Prime Financial and Finexia Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prime and Finexia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Prime Financial i.e., Prime Financial and Finexia Financial go up and down completely randomly.
Pair Corralation between Prime Financial and Finexia Financial
Assuming the 90 days trading horizon Prime Financial is expected to generate 30.13 times less return on investment than Finexia Financial. But when comparing it to its historical volatility, Prime Financial Group is 1.31 times less risky than Finexia Financial. It trades about 0.01 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Finexia Financial Group on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Finexia Financial Group or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prime Financial Group vs. Finexia Financial Group
Performance |
| Timeline |
| Prime Financial Group |
| Finexia Financial |
Prime Financial and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and Finexia Financial
The main advantage of trading using opposite Prime Financial and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, Finexia 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Prime Financial vs. Champion Iron | Prime Financial vs. Ridley | Prime Financial vs. Peel Mining | Prime Financial vs. Australian Dairy Farms |
| Finexia Financial vs. Champion Iron | Finexia Financial vs. Ridley | Finexia Financial vs. Peel Mining | Finexia Financial vs. Australian Dairy Farms |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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