Correlation Between AIC Mines and Prime Financial

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

By analyzing existing cross correlation between AIC Mines Limited and Prime Financial Group, you can compare the effects of market volatilities on AIC Mines and Prime Financial 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 AIC Mines with a short position of Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIC Mines and Prime Financial.

Diversification Opportunities for AIC Mines and Prime Financial

0.07

Correlation Coefficient

AIC Mines  Prime Financial

Significant diversification

The 3 months correlation between AIC and Prime is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AIC Mines Limited and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group and AIC Mines 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 AIC Mines Limited are associated (or correlated) with Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of AIC Mines i.e., AIC Mines and Prime Financial go up and down completely randomly.

Pair Corralation between AIC Mines and Prime Financial

Assuming the 90 days trading horizon AIC Mines is expected to generate 1.08 times less return on investment than Prime Financial. But when comparing it to its historical volatility, AIC Mines Limited is 1.02 times less risky than Prime Financial. It trades about 0.02 of its potential returns per unit of risk. Prime Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Prime Financial Group on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Prime Financial Group 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

AIC Mines Limited  vs.  Prime Financial Group

AIC Mines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIC Mines Limited 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 primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prime Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Prime Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AIC Mines and Prime Financial

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

The idea behind AIC Mines Limited and Prime Financial Group 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.