Correlation Between Prime Securities and Limoneira

Can any of the company-specific risk be diversified away by investing in both Prime Securities and Limoneira 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 Limoneira 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 Limoneira Co, you can compare the effects of market volatilities on Prime Securities and Limoneira 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 Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Securities and Limoneira.

Diversification Opportunities for Prime Securities and Limoneira

-0.17

Correlation Coefficient

Prime Securities  Limoneira

Good diversification

The 3 months correlation between Prime and Limoneira is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Prime Securities Limited and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Prime Securities i.e., Prime Securities and Limoneira go up and down completely randomly.

Pair Corralation between Prime Securities and Limoneira

Assuming the 90 days trading horizon Prime Securities Limited is expected to under-perform the Limoneira. In addition to that, Prime Securities is 1.06 times more volatile than Limoneira Co. It trades about -0.07 of its total potential returns per unit of risk. Limoneira Co is currently generating about 0.34 per unit of volatility. If you would invest  1,934  in Limoneira Co on February 4, 2024 and sell it today you would earn a total of  265.00  from holding Limoneira Co or generate 13.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.96%
Values	Daily Returns

Prime Securities Limited  vs.  Limoneira Co

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.

Limoneira

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Limoneira reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prime Securities and Limoneira

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

The idea behind Prime Securities Limited and Limoneira Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.