Correlation Between Prudential Qma and Emerald Banking

Can any of the company-specific risk be diversified away by investing in both Prudential Qma and Emerald Banking 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 Prudential Qma and Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prudential Qma Mid Cap and Emerald Banking And, you can compare the effects of market volatilities on Prudential Qma and Emerald Banking 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 Prudential Qma with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Emerald Banking.

Diversification Opportunities for Prudential Qma and Emerald Banking

0.91

Correlation Coefficient

Prudential Qma  Emerald Banking

Almost no diversification

The 3 months correlation between Prudential and Emerald is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Mid Cap and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Prudential Qma 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 Prudential Qma Mid Cap are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Prudential Qma i.e., Prudential Qma and Emerald Banking go up and down completely randomly.

Pair Corralation between Prudential Qma and Emerald Banking

Assuming the 90 days horizon Prudential Qma is expected to generate 2.31 times less return on investment than Emerald Banking. But when comparing it to its historical volatility, Prudential Qma Mid Cap is 2.47 times less risky than Emerald Banking. It trades about 0.14 of its potential returns per unit of risk. Emerald Banking And is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,751  in Emerald Banking And on September 13, 2024 and sell it today you would earn a total of  413.00  from holding Emerald Banking And or generate 15.01% return on investment over 90 days.

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

Prudential Qma Mid Cap  vs.  Emerald Banking And

Prudential Qma Mid

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emerald Banking And

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Emerald Banking showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Qma and Emerald Banking

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

The idea behind Prudential Qma Mid Cap and Emerald Banking And 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.