Correlation Between Prime Electronics and EZconn Corp

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

By analyzing existing cross correlation between Prime Electronics Satellitics and EZconn Corp, you can compare the effects of market volatilities on Prime Electronics and EZconn Corp 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 Electronics with a short position of EZconn Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Electronics and EZconn Corp.

Diversification Opportunities for Prime Electronics and EZconn Corp

-0.81

Correlation Coefficient

Prime Electronics  EZconn Corp

Pay attention - limited upside

The 3 months correlation between Prime and EZconn is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Prime Electronics Satellitics and EZconn Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZconn Corp and Prime Electronics 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 Electronics Satellitics are associated (or correlated) with EZconn Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZconn Corp has no effect on the direction of Prime Electronics i.e., Prime Electronics and EZconn Corp go up and down completely randomly.

Pair Corralation between Prime Electronics and EZconn Corp

Assuming the 90 days trading horizon Prime Electronics is expected to generate 6.53 times less return on investment than EZconn Corp. But when comparing it to its historical volatility, Prime Electronics Satellitics is 1.61 times less risky than EZconn Corp. It trades about 0.04 of its potential returns per unit of risk. EZconn Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,665  in EZconn Corp on October 8, 2024 and sell it today you would earn a total of  52,335  from holding EZconn Corp or generate 1121.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Prime Electronics Satellitics  vs.  EZconn Corp

Prime Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Electronics Satellitics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

EZconn Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EZconn Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EZconn Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prime Electronics and EZconn Corp

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

The idea behind Prime Electronics Satellitics and EZconn Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.