Correlation Between Prime Road and AIM Industrial
Can any of the company-specific risk be diversified away by investing in both Prime Road and AIM Industrial 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 Road and AIM Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Road Power and AIM Industrial Growth, you can compare the effects of market volatilities on Prime Road and AIM Industrial 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 Road with a short position of AIM Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Road and AIM Industrial.
Diversification Opportunities for Prime Road and AIM Industrial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prime and AIM is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Prime Road Power and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and Prime Road 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 Road Power are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of Prime Road i.e., Prime Road and AIM Industrial go up and down completely randomly.
Pair Corralation between Prime Road and AIM Industrial
Assuming the 90 days trading horizon Prime Road Power is expected to generate 51.13 times more return on investment than AIM Industrial. However, Prime Road is 51.13 times more volatile than AIM Industrial Growth. It trades about 0.03 of its potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.01 per unit of risk. If you would invest 141.00 in Prime Road Power on December 4, 2024 and sell it today you would lose (133.00) from holding Prime Road Power or give up 94.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Prime Road Power vs. AIM Industrial Growth
Performance |
| Timeline |
| Prime Road Power |
| AIM Industrial Growth |
Prime Road and AIM Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Road and AIM Industrial
The main advantage of trading using opposite Prime Road and AIM Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Road position performs unexpectedly, AIM Industrial 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 AIM Industrial will offset losses from the drop in AIM Industrial's long position.| Prime Road vs. BCPG Public | Prime Road vs. CK Power Public | Prime Road vs. TPI Polene Power | Prime Road vs. Earth Tech Environment |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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