Correlation Between Prime Financial and Prodigy Gold
Can any of the company-specific risk be diversified away by investing in both Prime Financial and Prodigy Gold 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 Prodigy Gold 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 Prodigy Gold NL, you can compare the effects of market volatilities on Prime Financial and Prodigy Gold 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 Prodigy Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Financial and Prodigy Gold.
Diversification Opportunities for Prime Financial and Prodigy Gold
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prime and Prodigy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Prime Financial Group and Prodigy Gold NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodigy Gold NL 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 Prodigy Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodigy Gold NL has no effect on the direction of Prime Financial i.e., Prime Financial and Prodigy Gold go up and down completely randomly.
Pair Corralation between Prime Financial and Prodigy Gold
Assuming the 90 days trading horizon Prime Financial is expected to generate 5.95 times less return on investment than Prodigy Gold. But when comparing it to its historical volatility, Prime Financial Group is 5.55 times less risky than Prodigy Gold. It trades about 0.08 of its potential returns per unit of risk. Prodigy Gold NL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Prodigy Gold NL on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Prodigy Gold NL or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Financial Group vs. Prodigy Gold NL
Performance |
| Timeline |
| Prime Financial Group |
| Prodigy Gold NL |
Prime Financial and Prodigy Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Financial and Prodigy Gold
The main advantage of trading using opposite Prime Financial and Prodigy Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Financial position performs unexpectedly, Prodigy Gold 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 Prodigy Gold will offset losses from the drop in Prodigy Gold's long position.| Prime Financial vs. REGAL ASIAN INVESTMENTS | Prime Financial vs. Perseus Mining | Prime Financial vs. Spirit Telecom | Prime Financial vs. Flagship Investments |
| Prodigy Gold vs. Wt Financial Group | Prodigy Gold vs. Collins Foods | Prodigy Gold vs. Prime Financial Group | Prodigy Gold vs. My Foodie Box |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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