Correlation Between Primorus Investments and Futura Medical

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

Diversification Opportunities for Primorus Investments and Futura Medical

0.26

Correlation Coefficient

Primorus Investments  Futura Medical

Modest diversification

The 3 months correlation between Primorus and Futura is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Primorus Investments plc and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Primorus Investments i.e., Primorus Investments and Futura Medical go up and down completely randomly.

Pair Corralation between Primorus Investments and Futura Medical

Assuming the 90 days trading horizon Primorus Investments plc is expected to generate 1.2 times more return on investment than Futura Medical. However, Primorus Investments is 1.2 times more volatile than Futura Medical. It trades about 0.06 of its potential returns per unit of risk. Futura Medical is currently generating about -0.01 per unit of risk. If you would invest  151.00  in Primorus Investments plc on October 10, 2024 and sell it today you would earn a total of  249.00  from holding Primorus Investments plc or generate 164.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Primorus Investments plc  vs.  Futura Medical

Primorus Investments plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primorus Investments plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Primorus Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Futura Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Primorus Investments and Futura Medical

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

The idea behind Primorus Investments plc and Futura Medical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.