Correlation Between Primorus Investments and Power Metal

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

Diversification Opportunities for Primorus Investments and Power Metal

-0.09

Correlation Coefficient

Primorus Investments  Power Metal

Good diversification

The 3 months correlation between Primorus and Power is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Primorus Investments plc and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Primorus Investments i.e., Primorus Investments and Power Metal go up and down completely randomly.

Pair Corralation between Primorus Investments and Power Metal

Assuming the 90 days trading horizon Primorus Investments plc is expected to generate 0.97 times more return on investment than Power Metal. However, Primorus Investments plc is 1.03 times less risky than Power Metal. It trades about -0.05 of its potential returns per unit of risk. Power Metal Resources is currently generating about -0.2 per unit of risk. If you would invest  410.00  in Primorus Investments plc on October 11, 2024 and sell it today you would lose (10.00) from holding Primorus Investments plc or give up 2.44% of portfolio value over 90 days.

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

Primorus Investments plc  vs.  Power Metal Resources

Primorus Investments plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primorus Investments plc are ranked lower than 5 (%) 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.

Power Metal Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Primorus Investments and Power Metal

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

The idea behind Primorus Investments plc and Power Metal Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.