Correlation Between Prodigy Gold and Step One
Can any of the company-specific risk be diversified away by investing in both Prodigy Gold and Step One 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 Prodigy Gold and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prodigy Gold NL and Step One Clothing, you can compare the effects of market volatilities on Prodigy Gold and Step One 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 Prodigy Gold with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodigy Gold and Step One.
Diversification Opportunities for Prodigy Gold and Step One
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prodigy and Step is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Prodigy Gold NL and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and Prodigy Gold 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 Prodigy Gold NL are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Prodigy Gold i.e., Prodigy Gold and Step One go up and down completely randomly.
Pair Corralation between Prodigy Gold and Step One
Assuming the 90 days trading horizon Prodigy Gold NL is expected to generate 8.29 times more return on investment than Step One. However, Prodigy Gold is 8.29 times more volatile than Step One Clothing. It trades about 0.1 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.19 per unit of risk. If you would invest 0.20 in Prodigy Gold NL on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Prodigy Gold NL or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prodigy Gold NL vs. Step One Clothing
Performance |
Timeline |
Prodigy Gold NL |
Step One Clothing |
Prodigy Gold and Step One Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prodigy Gold and Step One
The main advantage of trading using opposite Prodigy Gold and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prodigy Gold position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.Prodigy Gold vs. Northern Star Resources | Prodigy Gold vs. Evolution Mining | Prodigy Gold vs. Aneka Tambang Tbk | Prodigy Gold vs. Sandfire Resources NL |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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