Correlation Between Prime Securities and Molson Coors

Can any of the company-specific risk be diversified away by investing in both Prime Securities and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on Prime Securities and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Securities and Molson Coors.

Diversification Opportunities for Prime Securities and Molson Coors

-0.07

Correlation Coefficient

Prime Securities  Molson Coors

Good diversification

The 3 months correlation between Prime and Molson is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Prime Securities Limited and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Prime Securities i.e., Prime Securities and Molson Coors go up and down completely randomly.

Pair Corralation between Prime Securities and Molson Coors

Assuming the 90 days trading horizon Prime Securities Limited is expected to generate 0.8 times more return on investment than Molson Coors. However, Prime Securities Limited is 1.26 times less risky than Molson Coors. It trades about -0.07 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.28 per unit of risk. If you would invest  18,655  in Prime Securities Limited on February 4, 2024 and sell it today you would lose (545.00) from holding Prime Securities Limited or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Prime Securities Limited  vs.  Molson Coors Brewing

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.

Molson Coors Brewing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molson Coors Brewing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Prime Securities and Molson Coors

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

The idea behind Prime Securities Limited and Molson Coors Brewing 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.