Correlation Between Primoco UAV and EMan As

Can any of the company-specific risk be diversified away by investing in both Primoco UAV and EMan As 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 Primoco UAV and EMan As into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primoco UAV SE and eMan as, you can compare the effects of market volatilities on Primoco UAV and EMan As 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 Primoco UAV with a short position of EMan As. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primoco UAV and EMan As.

Diversification Opportunities for Primoco UAV and EMan As

0.64

Correlation Coefficient

Primoco UAV  EMan As

Poor diversification

The 3 months correlation between Primoco and EMan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Primoco UAV SE and eMan as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMan as and Primoco UAV 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 Primoco UAV SE are associated (or correlated) with EMan As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMan as has no effect on the direction of Primoco UAV i.e., Primoco UAV and EMan As go up and down completely randomly.

Pair Corralation between Primoco UAV and EMan As

Assuming the 90 days trading horizon Primoco UAV SE is expected to generate 0.3 times more return on investment than EMan As. However, Primoco UAV SE is 3.31 times less risky than EMan As. It trades about -0.03 of its potential returns per unit of risk. eMan as is currently generating about -0.19 per unit of risk. If you would invest  90,500  in Primoco UAV SE on September 2, 2024 and sell it today you would lose (500.00) from holding Primoco UAV SE or give up 0.55% of portfolio value over 90 days.

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

Primoco UAV SE  vs.  eMan as

Primoco UAV SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primoco UAV SE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Primoco UAV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

eMan as

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eMan as has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Primoco UAV and EMan As

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

The idea behind Primoco UAV SE and eMan as 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.