Correlation Between Prudential Health and Saat Defensive
Can any of the company-specific risk be diversified away by investing in both Prudential Health and Saat Defensive 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 Prudential Health and Saat Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Health Sciences and Saat Defensive Strategy, you can compare the effects of market volatilities on Prudential Health and Saat Defensive 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 Prudential Health with a short position of Saat Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Saat Defensive.
Diversification Opportunities for Prudential Health and Saat Defensive
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prudential and Saat is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Saat Defensive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Defensive Strategy and Prudential Health 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 Prudential Health Sciences are associated (or correlated) with Saat Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Defensive Strategy has no effect on the direction of Prudential Health i.e., Prudential Health and Saat Defensive go up and down completely randomly.
Pair Corralation between Prudential Health and Saat Defensive
Assuming the 90 days horizon Prudential Health Sciences is expected to generate 7.77 times more return on investment than Saat Defensive. However, Prudential Health is 7.77 times more volatile than Saat Defensive Strategy. It trades about 0.06 of its potential returns per unit of risk. Saat Defensive Strategy is currently generating about 0.2 per unit of risk. If you would invest 3,645 in Prudential Health Sciences on September 2, 2024 and sell it today you would earn a total of 511.00 from holding Prudential Health Sciences or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. Saat Defensive Strategy
Performance |
| Timeline |
| Prudential Health |
| Saat Defensive Strategy |
Prudential Health and Saat Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and Saat Defensive
The main advantage of trading using opposite Prudential Health and Saat Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, Saat Defensive 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 Saat Defensive will offset losses from the drop in Saat Defensive's long position.The idea behind Prudential Health Sciences and Saat Defensive Strategy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Saat Defensive vs. Simt Multi Asset Accumulation | Saat Defensive vs. Saat Market Growth | Saat Defensive vs. Simt Real Return | Saat Defensive vs. Simt Small Cap |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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