Correlation Between Retail Food and Prime Financial
Can any of the company-specific risk be diversified away by investing in both Retail Food 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 Retail Food and Prime Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Prime Financial Group, you can compare the effects of market volatilities on Retail Food 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 Retail Food with a short position of Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Prime Financial.
Diversification Opportunities for Retail Food and Prime Financial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Retail and Prime is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group 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 Retail Food 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 Retail Food Group 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 Retail Food i.e., Retail Food and Prime Financial go up and down completely randomly.
Pair Corralation between Retail Food and Prime Financial
Assuming the 90 days trading horizon Retail Food Group is expected to generate 1.26 times more return on investment than Prime Financial. However, Retail Food is 1.26 times more volatile than Prime Financial Group. It trades about 0.18 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 6.50 in Retail Food Group on September 1, 2024 and sell it today you would earn a total of 0.70 from holding Retail Food Group or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Prime Financial Group
Performance |
| Timeline |
| Retail Food Group |
| Prime Financial Group |
Retail Food and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Prime Financial
The main advantage of trading using opposite Retail Food and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food 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.| Retail Food vs. iShares Global Healthcare | Retail Food vs. Australian Dairy Farms | Retail Food vs. Adriatic Metals Plc | Retail Food vs. Australian Agricultural |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stocks Directory Find actively traded stocks across global markets |