Correlation Between Primary Health and Atome Energy
Can any of the company-specific risk be diversified away by investing in both Primary Health and Atome Energy 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 Primary Health and Atome Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primary Health Properties and Atome Energy PLC, you can compare the effects of market volatilities on Primary Health and Atome Energy 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 Primary Health with a short position of Atome Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Atome Energy.
Diversification Opportunities for Primary Health and Atome Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Primary and Atome is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Atome Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atome Energy PLC and Primary 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 Primary Health Properties are associated (or correlated) with Atome Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atome Energy PLC has no effect on the direction of Primary Health i.e., Primary Health and Atome Energy go up and down completely randomly.
Pair Corralation between Primary Health and Atome Energy
Assuming the 90 days trading horizon Primary Health Properties is expected to under-perform the Atome Energy. But the stock apears to be less risky and, when comparing its historical volatility, Primary Health Properties is 1.97 times less risky than Atome Energy. The stock trades about -0.06 of its potential returns per unit of risk. The Atome Energy PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,750 in Atome Energy PLC on October 26, 2024 and sell it today you would earn a total of 0.00 from holding Atome Energy PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primary Health Properties vs. Atome Energy PLC
Performance |
| Timeline |
| Primary Health Properties |
| Atome Energy PLC |
Primary Health and Atome Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primary Health and Atome Energy
The main advantage of trading using opposite Primary Health and Atome Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health position performs unexpectedly, Atome Energy 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 Atome Energy will offset losses from the drop in Atome Energy's long position.| Primary Health vs. Europa Metals | Primary Health vs. Fresenius Medical Care | Primary Health vs. DFS Furniture PLC | Primary Health vs. Coeur Mining |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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