Correlation Between Armada Hflr and Prime Oil

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

By analyzing existing cross correlation between Armada Hflr Pr and Prime Oil Chemical, you can compare the effects of market volatilities on Armada Hflr and Prime Oil 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 Armada Hflr with a short position of Prime Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Prime Oil.

Diversification Opportunities for Armada Hflr and Prime Oil

0.05

Correlation Coefficient

Armada Hflr  Prime Oil

Significant diversification

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

Pair Corralation between Armada Hflr and Prime Oil

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Prime Oil. In addition to that, Armada Hflr is 3.84 times more volatile than Prime Oil Chemical. It trades about -0.08 of its total potential returns per unit of risk. Prime Oil Chemical is currently generating about -0.03 per unit of volatility. If you would invest  1,825  in Prime Oil Chemical on September 14, 2024 and sell it today you would lose (15.00) from holding Prime Oil Chemical or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Armada Hflr Pr  vs.  Prime Oil Chemical

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Prime Oil Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Oil Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prime Oil is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Armada Hflr and Prime Oil

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

The idea behind Armada Hflr Pr and Prime Oil Chemical 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 Commodity Directory module to find actively traded commodities issued by global exchanges.