Correlation Between Stock Exchange and Prime Road
Can any of the company-specific risk be diversified away by investing in both Stock Exchange and Prime Road 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 Stock Exchange and Prime Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stock Exchange Of and Prime Road Power, you can compare the effects of market volatilities on Stock Exchange and Prime Road 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 Stock Exchange with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Exchange and Prime Road.
Diversification Opportunities for Stock Exchange and Prime Road
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stock and Prime is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stock Exchange Of and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power and Stock Exchange 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 Stock Exchange Of are associated (or correlated) with Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of Stock Exchange i.e., Stock Exchange and Prime Road go up and down completely randomly.
Pair Corralation between Stock Exchange and Prime Road
Assuming the 90 days trading horizon Stock Exchange Of is expected to under-perform the Prime Road. But the index apears to be less risky and, when comparing its historical volatility, Stock Exchange Of is 5.89 times less risky than Prime Road. The index trades about -0.11 of its potential returns per unit of risk. The Prime Road Power is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Prime Road Power on September 15, 2024 and sell it today you would earn a total of 2.00 from holding Prime Road Power or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stock Exchange Of vs. Prime Road Power
Performance |
| Timeline |
Stock Exchange and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Stock Exchange Of
Pair trading matchups for Stock Exchange
Prime Road Power
Pair trading matchups for Prime Road
Pair Trading with Stock Exchange and Prime Road
The main advantage of trading using opposite Stock Exchange and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stock Exchange position performs unexpectedly, Prime Road 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 Road will offset losses from the drop in Prime Road's long position.| Stock Exchange vs. Somboon Advance Technology | Stock Exchange vs. AJ Advance Technology | Stock Exchange vs. Tipco Foods Public | Stock Exchange vs. Surapon Foods Public |
| Prime Road vs. BCPG Public | Prime Road vs. Energy Absolute Public | Prime Road vs. Gunkul Engineering Public | Prime Road vs. Gulf Energy Development |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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