Correlation Between Primorus Investments and Marstons PLC

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

Diversification Opportunities for Primorus Investments and Marstons PLC

-0.23

Correlation Coefficient

Primorus Investments  Marstons PLC

Very good diversification

The 3 months correlation between Primorus and Marstons is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Primorus Investments plc and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC 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 Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Primorus Investments i.e., Primorus Investments and Marstons PLC go up and down completely randomly.

Pair Corralation between Primorus Investments and Marstons PLC

Assuming the 90 days trading horizon Primorus Investments plc is expected to generate 1.96 times more return on investment than Marstons PLC. However, Primorus Investments is 1.96 times more volatile than Marstons PLC. It trades about 0.06 of its potential returns per unit of risk. Marstons PLC is currently generating about 0.01 per unit of risk. If you would invest  174.00  in Primorus Investments plc on October 22, 2024 and sell it today you would earn a total of  226.00  from holding Primorus Investments plc or generate 129.89% return on investment over 90 days.

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

Primorus Investments plc  vs.  Marstons PLC

Primorus Investments plc

Risk-Adjusted Performance

2 of 100

Very 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Marstons PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Marstons PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Primorus Investments and Marstons PLC

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

The idea behind Primorus Investments plc and Marstons PLC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.