Correlation Between PM Capital and Prime Financial
Can any of the company-specific risk be diversified away by investing in both PM Capital and Prime 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 PM Capital and Prime Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Prime Financial Group, you can compare the effects of market volatilities on PM Capital and Prime 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 PM Capital with a short position of Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Prime Financial.
Diversification Opportunities for PM Capital and Prime Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PGF and Prime is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group and PM Capital 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 PM Capital Global are associated (or correlated) with Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of PM Capital i.e., PM Capital and Prime Financial go up and down completely randomly.
Pair Corralation between PM Capital and Prime Financial
Assuming the 90 days trading horizon PM Capital Global is expected to generate 0.53 times more return on investment than Prime Financial. However, PM Capital Global is 1.89 times less risky than Prime Financial. It trades about -0.09 of its potential returns per unit of risk. Prime Financial Group is currently generating about -0.08 per unit of risk. If you would invest 234.00 in PM Capital Global on September 1, 2024 and sell it today you would lose (6.00) from holding PM Capital Global or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PM Capital Global vs. Prime Financial Group
Performance |
| Timeline |
| PM Capital Global |
| Prime Financial Group |
PM Capital and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PM Capital and Prime Financial
The main advantage of trading using opposite PM Capital and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital position performs unexpectedly, Prime 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 Prime Financial will offset losses from the drop in Prime Financial's long position.| PM Capital vs. Skycity Entertainment Group | PM Capital vs. Retail Food Group | PM Capital vs. Truscott Mining Corp | PM Capital vs. Autosports Group |
| Prime Financial vs. WA1 Resources | Prime Financial vs. Predictive Discovery | Prime Financial vs. Cooper Metals | Prime Financial vs. OD6 Metals |
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 CEOs Directory module to screen CEOs from public companies around the world.
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