Correlation Between Prime Dividend and Helios Fairfax

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

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

Diversification Opportunities for Prime Dividend and Helios Fairfax

0.38

Correlation Coefficient

Prime Dividend  Helios Fairfax

Weak diversification

The 3 months correlation between Prime and Helios is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Prime Dividend Corp and Helios Fairfax Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Fairfax Partners and Prime Dividend 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 Dividend Corp are associated (or correlated) with Helios Fairfax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Fairfax Partners has no effect on the direction of Prime Dividend i.e., Prime Dividend and Helios Fairfax go up and down completely randomly.

Pair Corralation between Prime Dividend and Helios Fairfax

Assuming the 90 days trading horizon Prime Dividend Corp is expected to generate 0.41 times more return on investment than Helios Fairfax. However, Prime Dividend Corp is 2.46 times less risky than Helios Fairfax. It trades about -0.02 of its potential returns per unit of risk. Helios Fairfax Partners is currently generating about -0.02 per unit of risk. If you would invest  838.00  in Prime Dividend Corp on December 30, 2024 and sell it today you would lose (23.00) from holding Prime Dividend Corp or give up 2.74% of portfolio value over 90 days.

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

Prime Dividend Corp  vs.  Helios Fairfax Partners

Prime Dividend Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Dividend Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Prime Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Helios Fairfax Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helios Fairfax Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Helios Fairfax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prime Dividend and Helios Fairfax

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

The idea behind Prime Dividend Corp and Helios Fairfax Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.