Correlation Between Prairie Provident and Daikin IndustriesLtd

Can any of the company-specific risk be diversified away by investing in both Prairie Provident and Daikin IndustriesLtd 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 Prairie Provident and Daikin IndustriesLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prairie Provident Resources and Daikin IndustriesLtd, you can compare the effects of market volatilities on Prairie Provident and Daikin IndustriesLtd 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 Prairie Provident with a short position of Daikin IndustriesLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and Daikin IndustriesLtd.

Diversification Opportunities for Prairie Provident and Daikin IndustriesLtd

-0.27

Correlation Coefficient

Prairie Provident  Daikin IndustriesLtd

Very good diversification

The 3 months correlation between Prairie and Daikin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources and Daikin IndustriesLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daikin IndustriesLtd and Prairie Provident 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 Prairie Provident Resources are associated (or correlated) with Daikin IndustriesLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daikin IndustriesLtd has no effect on the direction of Prairie Provident i.e., Prairie Provident and Daikin IndustriesLtd go up and down completely randomly.

Pair Corralation between Prairie Provident and Daikin IndustriesLtd

Assuming the 90 days horizon Prairie Provident Resources is expected to under-perform the Daikin IndustriesLtd. In addition to that, Prairie Provident is 1.91 times more volatile than Daikin IndustriesLtd. It trades about 0.0 of its total potential returns per unit of risk. Daikin IndustriesLtd is currently generating about 0.08 per unit of volatility. If you would invest  11,505  in Daikin IndustriesLtd on May 6, 2025 and sell it today you would earn a total of  1,657  from holding Daikin IndustriesLtd or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.74%
Values	Daily Returns

Prairie Provident Resources  vs.  Daikin IndustriesLtd

Prairie Provident

Risk-Adjusted Performance

Weak

Over the last 90 days Prairie Provident Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Prairie Provident is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Daikin IndustriesLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daikin IndustriesLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Daikin IndustriesLtd reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prairie Provident and Daikin IndustriesLtd

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

The idea behind Prairie Provident Resources and Daikin IndustriesLtd 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.