Correlation Between Prime Securities and Ab Global

Can any of the company-specific risk be diversified away by investing in both Prime Securities and Ab Global 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 Securities and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prime Securities Limited and Ab Global E, you can compare the effects of market volatilities on Prime Securities and Ab Global 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 Securities with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Securities and Ab Global.

Diversification Opportunities for Prime Securities and Ab Global

0.05

Correlation Coefficient

Prime Securities  Ab Global

Significant diversification

The 3 months correlation between Prime and GCEAX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Prime Securities Limited and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E and Prime Securities 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 Securities Limited are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Prime Securities i.e., Prime Securities and Ab Global go up and down completely randomly.

Pair Corralation between Prime Securities and Ab Global

Assuming the 90 days trading horizon Prime Securities is expected to generate 2.06 times less return on investment than Ab Global. In addition to that, Prime Securities is 3.39 times more volatile than Ab Global E. It trades about 0.01 of its total potential returns per unit of risk. Ab Global E is currently generating about 0.1 per unit of volatility. If you would invest  1,566  in Ab Global E on February 5, 2024 and sell it today you would earn a total of  65.00  from holding Ab Global E or generate 4.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Prime Securities Limited  vs.  Ab Global E

Prime Securities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Securities Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Prime Securities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ab Global E

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prime Securities and Ab Global

The main advantage of trading using opposite Prime Securities and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Securities position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.

The idea behind Prime Securities Limited and Ab Global E pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.