Correlation Between 360 Finance and PGIM Large

Can any of the company-specific risk be diversified away by investing in both 360 Finance and PGIM Large 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 360 Finance and PGIM Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 360 Finance and PGIM Large Cap Buffer, you can compare the effects of market volatilities on 360 Finance and PGIM Large 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 360 Finance with a short position of PGIM Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and PGIM Large.

Diversification Opportunities for 360 Finance and PGIM Large

0.72

Correlation Coefficient

360 Finance  PGIM Large

Poor diversification

The 3 months correlation between 360 and PGIM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and PGIM Large Cap Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Large Cap and 360 Finance 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 360 Finance are associated (or correlated) with PGIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Large Cap has no effect on the direction of 360 Finance i.e., 360 Finance and PGIM Large go up and down completely randomly.

Pair Corralation between 360 Finance and PGIM Large

Given the investment horizon of 90 days 360 Finance is expected to generate 7.14 times more return on investment than PGIM Large. However, 360 Finance is 7.14 times more volatile than PGIM Large Cap Buffer. It trades about 0.11 of its potential returns per unit of risk. PGIM Large Cap Buffer is currently generating about 0.17 per unit of risk. If you would invest  1,596  in 360 Finance on October 5, 2024 and sell it today you would earn a total of  2,271  from holding 360 Finance or generate 142.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.16%
Values	Daily Returns

360 Finance  vs.  PGIM Large Cap Buffer

360 Finance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Finance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, 360 Finance displayed solid returns over the last few months and may actually be approaching a breakup point.

PGIM Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Large Cap Buffer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PGIM Large is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with 360 Finance and PGIM Large

The main advantage of trading using opposite 360 Finance and PGIM Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance position performs unexpectedly, PGIM Large 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 PGIM Large will offset losses from the drop in PGIM Large's long position.

The idea behind 360 Finance and PGIM Large Cap Buffer 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 CEOs Directory module to screen CEOs from public companies around the world.