Correlation Between Franklin Wireless and Prestige Wealth

Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and Prestige Wealth 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 Franklin Wireless and Prestige Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Wireless Corp and Prestige Wealth Ordinary, you can compare the effects of market volatilities on Franklin Wireless and Prestige Wealth 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 Franklin Wireless with a short position of Prestige Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and Prestige Wealth.

Diversification Opportunities for Franklin Wireless and Prestige Wealth

0.17

Correlation Coefficient

Franklin Wireless  Prestige Wealth

Average diversification

The 3 months correlation between Franklin and Prestige is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Prestige Wealth Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Wealth Ordinary and Franklin Wireless 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 Franklin Wireless Corp are associated (or correlated) with Prestige Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Wealth Ordinary has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Prestige Wealth go up and down completely randomly.

Pair Corralation between Franklin Wireless and Prestige Wealth

Given the investment horizon of 90 days Franklin Wireless Corp is expected to under-perform the Prestige Wealth. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Wireless Corp is 7.77 times less risky than Prestige Wealth. The stock trades about -0.02 of its potential returns per unit of risk. The Prestige Wealth Ordinary is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Prestige Wealth Ordinary on September 14, 2024 and sell it today you would earn a total of  40.00  from holding Prestige Wealth Ordinary or generate 37.04% return on investment over 90 days.

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

Franklin Wireless Corp  vs.  Prestige Wealth Ordinary

Franklin Wireless Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Prestige Wealth Ordinary

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Wealth Ordinary are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Prestige Wealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Wireless and Prestige Wealth

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

The idea behind Franklin Wireless Corp and Prestige Wealth Ordinary 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.