Correlation Between Prime Securities and Bright Rock

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

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

Diversification Opportunities for Prime Securities and Bright Rock

0.0

Correlation Coefficient

Prime Securities  Bright Rock

Pay attention - limited upside

The 3 months correlation between Prime and Bright is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prime Securities Limited and Bright Rock Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Quality and Prime Securities 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 Securities Limited are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Quality has no effect on the direction of Prime Securities i.e., Prime Securities and Bright Rock go up and down completely randomly.

Pair Corralation between Prime Securities and Bright Rock

If you would invest (100.00) in Bright Rock Quality on February 5, 2024 and sell it today you would earn a total of  100.00  from holding Bright Rock Quality or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Prime Securities Limited  vs.  Bright Rock Quality

Prime Securities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Securities Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Prime Securities is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bright Rock Quality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Rock Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Bright Rock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prime Securities and Bright Rock

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

The idea behind Prime Securities Limited and Bright Rock Quality 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.