Correlation Between Top Frontier and Prime Media

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

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

Diversification Opportunities for Top Frontier and Prime Media

0.51

Correlation Coefficient

Top Frontier  Prime Media

Very weak diversification

The 3 months correlation between Top and Prime is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings and Top Frontier 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 Top Frontier Investment are associated (or correlated) with Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of Top Frontier i.e., Top Frontier and Prime Media go up and down completely randomly.

Pair Corralation between Top Frontier and Prime Media

Assuming the 90 days trading horizon Top Frontier Investment is expected to generate 0.77 times more return on investment than Prime Media. However, Top Frontier Investment is 1.29 times less risky than Prime Media. It trades about -0.01 of its potential returns per unit of risk. Prime Media Holdings is currently generating about -0.07 per unit of risk. If you would invest  6,310  in Top Frontier Investment on December 30, 2024 and sell it today you would lose (310.00) from holding Top Frontier Investment or give up 4.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Top Frontier Investment  vs.  Prime Media Holdings

Top Frontier Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Top Frontier is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Prime Media Holdings

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Top Frontier and Prime Media

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

The idea behind Top Frontier Investment and Prime Media Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.