Correlation Between Prime Number and LAMF Global

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

By analyzing existing cross correlation between Prime Number Acquisition and LAMF Global Ventures, you can compare the effects of market volatilities on Prime Number and LAMF Global 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 Number with a short position of LAMF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Number and LAMF Global.

Diversification Opportunities for Prime Number and LAMF Global

0.06

Correlation Coefficient

Prime Number  LAMF Global

Significant diversification

The 3 months correlation between Prime and LAMF is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Prime Number Acquisition and LAMF Global Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMF Global Ventures and Prime Number 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 Number Acquisition are associated (or correlated) with LAMF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMF Global Ventures has no effect on the direction of Prime Number i.e., Prime Number and LAMF Global go up and down completely randomly.

Pair Corralation between Prime Number and LAMF Global

Given the investment horizon of 90 days Prime Number Acquisition is expected to generate 0.33 times more return on investment than LAMF Global. However, Prime Number Acquisition is 3.02 times less risky than LAMF Global. It trades about 0.13 of its potential returns per unit of risk. LAMF Global Ventures is currently generating about 0.03 per unit of risk. If you would invest  1,017  in Prime Number Acquisition on September 26, 2024 and sell it today you would earn a total of  40.00  from holding Prime Number Acquisition or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Prime Number Acquisition  vs.  LAMF Global Ventures

Prime Number Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Number Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Prime Number is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LAMF Global Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAMF Global Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LAMF Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prime Number and LAMF Global

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

The idea behind Prime Number Acquisition and LAMF Global Ventures 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.