Correlation Between Prime Securities and Fair Isaac

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

Diversification Opportunities for Prime Securities and Fair Isaac

0.17

Correlation Coefficient

Prime Securities  Fair Isaac

Average diversification

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

Pair Corralation between Prime Securities and Fair Isaac

Assuming the 90 days trading horizon Prime Securities is expected to generate 1.69 times less return on investment than Fair Isaac. But when comparing it to its historical volatility, Prime Securities Limited is 1.18 times less risky than Fair Isaac. It trades about 0.08 of its potential returns per unit of risk. Fair Isaac is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  36,440  in Fair Isaac on February 4, 2024 and sell it today you would earn a total of  82,861  from holding Fair Isaac or generate 227.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.18%
Values	Daily Returns

Prime Securities Limited  vs.  Fair Isaac

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.

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fair Isaac is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Prime Securities and Fair Isaac

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

The idea behind Prime Securities Limited and Fair Isaac 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.