Correlation Between Prodigy Gold and Step One

Can any of the company-specific risk be diversified away by investing in both Prodigy Gold and Step One 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 Prodigy Gold and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prodigy Gold NL and Step One Clothing, you can compare the effects of market volatilities on Prodigy Gold and Step One 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 Prodigy Gold with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodigy Gold and Step One.

Diversification Opportunities for Prodigy Gold and Step One

0.04

Correlation Coefficient

Prodigy Gold  Step One

Significant diversification

The 3 months correlation between Prodigy and Step is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Prodigy Gold NL and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and Prodigy Gold 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 Prodigy Gold NL are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Prodigy Gold i.e., Prodigy Gold and Step One go up and down completely randomly.

Pair Corralation between Prodigy Gold and Step One

Assuming the 90 days trading horizon Prodigy Gold NL is expected to generate 8.29 times more return on investment than Step One. However, Prodigy Gold is 8.29 times more volatile than Step One Clothing. It trades about 0.1 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.19 per unit of risk. If you would invest  0.20  in Prodigy Gold NL on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Prodigy Gold NL 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

Prodigy Gold NL  vs.  Step One Clothing

Prodigy Gold NL

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prodigy Gold NL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prodigy Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Step One Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Step One Clothing 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 basic 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.

Pair Trading with Prodigy Gold and Step One

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

The idea behind Prodigy Gold NL and Step One Clothing 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.