Correlation Between Power Solution and Prima Marine
Can any of the company-specific risk be diversified away by investing in both Power Solution and Prima Marine 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 Power Solution and Prima Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Solution Technologies and Prima Marine Public, you can compare the effects of market volatilities on Power Solution and Prima Marine 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 Power Solution with a short position of Prima Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Solution and Prima Marine.
Diversification Opportunities for Power Solution and Prima Marine
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and Prima is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and Prima Marine Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prima Marine Public and Power Solution 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 Power Solution Technologies are associated (or correlated) with Prima Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prima Marine Public has no effect on the direction of Power Solution i.e., Power Solution and Prima Marine go up and down completely randomly.
Pair Corralation between Power Solution and Prima Marine
Assuming the 90 days trading horizon Power Solution Technologies is expected to generate 80.87 times more return on investment than Prima Marine. However, Power Solution is 80.87 times more volatile than Prima Marine Public. It trades about 0.11 of its potential returns per unit of risk. Prima Marine Public is currently generating about 0.13 per unit of risk. If you would invest 48.00 in Power Solution Technologies on August 28, 2024 and sell it today you would lose (4.00) from holding Power Solution Technologies or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Solution Technologies vs. Prima Marine Public
Performance |
| Timeline |
| Power Solution Techn |
| Prima Marine Public |
Power Solution and Prima Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Solution and Prima Marine
The main advantage of trading using opposite Power Solution and Prima Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Solution position performs unexpectedly, Prima Marine 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 Prima Marine will offset losses from the drop in Prima Marine's long position.| Power Solution vs. WHA Public | Power Solution vs. Siri Prime Office | Power Solution vs. Ananda Development Public | Power Solution vs. Bangkok Land Public |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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