Correlation Between Primorus Investments and Alliance Data

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

By analyzing existing cross correlation between Primorus Investments plc and Alliance Data Systems, you can compare the effects of market volatilities on Primorus Investments and Alliance Data 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 Primorus Investments with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primorus Investments and Alliance Data.

Diversification Opportunities for Primorus Investments and Alliance Data

-0.06

Correlation Coefficient

Primorus Investments  Alliance Data

Good diversification

The 3 months correlation between Primorus and Alliance is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Primorus Investments plc and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Primorus Investments 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 Primorus Investments plc are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Primorus Investments i.e., Primorus Investments and Alliance Data go up and down completely randomly.

Pair Corralation between Primorus Investments and Alliance Data

Assuming the 90 days trading horizon Primorus Investments plc is expected to generate 0.6 times more return on investment than Alliance Data. However, Primorus Investments plc is 1.68 times less risky than Alliance Data. It trades about 0.23 of its potential returns per unit of risk. Alliance Data Systems is currently generating about 0.09 per unit of risk. If you would invest  375.00  in Primorus Investments plc on October 25, 2024 and sell it today you would earn a total of  25.00  from holding Primorus Investments plc or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Primorus Investments plc  vs.  Alliance Data Systems

Primorus Investments plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Primorus Investments plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Primorus Investments is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Alliance Data Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Data Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alliance Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primorus Investments and Alliance Data

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

The idea behind Primorus Investments plc and Alliance Data Systems 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.