Correlation Between Primorus Investments and American Homes

Can any of the company-specific risk be diversified away by investing in both Primorus Investments and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on Primorus Investments and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primorus Investments and American Homes.

Diversification Opportunities for Primorus Investments and American Homes

-0.01

Correlation Coefficient

Primorus Investments  American Homes

Good diversification

The 3 months correlation between Primorus and American is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Primorus Investments plc and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Primorus Investments i.e., Primorus Investments and American Homes go up and down completely randomly.

Pair Corralation between Primorus Investments and American Homes

Assuming the 90 days trading horizon Primorus Investments plc is expected to generate 2.93 times more return on investment than American Homes. However, Primorus Investments is 2.93 times more volatile than American Homes 4. It trades about 0.05 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.01 per unit of risk. If you would invest  350.00  in Primorus Investments plc on October 7, 2024 and sell it today you would earn a total of  25.00  from holding Primorus Investments plc or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Primorus Investments plc  vs.  American Homes 4

Primorus Investments plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primorus Investments plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Primorus Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

American Homes 4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Homes is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Primorus Investments and American Homes

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

The idea behind Primorus Investments plc and American Homes 4 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.