Correlation Between Primaris Retail and Asiabasemetals

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

By analyzing existing cross correlation between Primaris Retail RE and Asiabasemetals, you can compare the effects of market volatilities on Primaris Retail and Asiabasemetals 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 Primaris Retail with a short position of Asiabasemetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primaris Retail and Asiabasemetals.

Diversification Opportunities for Primaris Retail and Asiabasemetals

-0.3

Correlation Coefficient

Primaris Retail  Asiabasemetals

Very good diversification

The 3 months correlation between Primaris and Asiabasemetals is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Primaris Retail RE and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals and Primaris Retail 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 Primaris Retail RE are associated (or correlated) with Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of Primaris Retail i.e., Primaris Retail and Asiabasemetals go up and down completely randomly.

Pair Corralation between Primaris Retail and Asiabasemetals

Assuming the 90 days trading horizon Primaris Retail is expected to generate 14.03 times less return on investment than Asiabasemetals. But when comparing it to its historical volatility, Primaris Retail RE is 11.73 times less risky than Asiabasemetals. It trades about 0.03 of its potential returns per unit of risk. Asiabasemetals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Asiabasemetals on September 14, 2024 and sell it today you would lose (1.00) from holding Asiabasemetals or give up 11.11% of portfolio value over 90 days.

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

Primaris Retail RE  vs.  Asiabasemetals

Primaris Retail RE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Primaris Retail RE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Primaris Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asiabasemetals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiabasemetals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asiabasemetals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primaris Retail and Asiabasemetals

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

The idea behind Primaris Retail RE and Asiabasemetals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.