Correlation Between Prime Media and STI Education

Can any of the company-specific risk be diversified away by investing in both Prime Media and STI Education 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 Prime Media and STI Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prime Media Holdings and STI Education Systems, you can compare the effects of market volatilities on Prime Media and STI Education 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 Prime Media with a short position of STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Media and STI Education.

Diversification Opportunities for Prime Media and STI Education

-0.25

Correlation Coefficient

Prime Media  STI Education

Very good diversification

The 3 months correlation between Prime and STI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Prime Media Holdings and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education Systems and Prime Media 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 Prime Media Holdings are associated (or correlated) with STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of Prime Media i.e., Prime Media and STI Education go up and down completely randomly.

Pair Corralation between Prime Media and STI Education

Assuming the 90 days trading horizon Prime Media is expected to generate 1.5 times less return on investment than STI Education. In addition to that, Prime Media is 2.22 times more volatile than STI Education Systems. It trades about 0.07 of its total potential returns per unit of risk. STI Education Systems is currently generating about 0.23 per unit of volatility. If you would invest  128.00  in STI Education Systems on October 26, 2024 and sell it today you would earn a total of  13.00  from holding STI Education Systems or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

Prime Media Holdings  vs.  STI Education Systems

Prime Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

STI Education Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prime Media and STI Education

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

The idea behind Prime Media Holdings and STI Education 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.