Correlation Between MOL Hungarian and Premier Foods
Can any of the company-specific risk be diversified away by investing in both MOL Hungarian and Premier Foods 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 MOL Hungarian and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOL Hungarian Oil and Premier Foods PLC, you can compare the effects of market volatilities on MOL Hungarian and Premier Foods 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 MOL Hungarian with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOL Hungarian and Premier Foods.
Diversification Opportunities for MOL Hungarian and Premier Foods
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between MOL and Premier is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MOL Hungarian Oil and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and MOL Hungarian 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 MOL Hungarian Oil are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of MOL Hungarian i.e., MOL Hungarian and Premier Foods go up and down completely randomly.
Pair Corralation between MOL Hungarian and Premier Foods
Assuming the 90 days trading horizon MOL Hungarian is expected to generate 4.97 times less return on investment than Premier Foods. In addition to that, MOL Hungarian is 1.71 times more volatile than Premier Foods PLC. It trades about 0.01 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 per unit of volatility. If you would invest 16,941 in Premier Foods PLC on August 29, 2024 and sell it today you would earn a total of 2,219 from holding Premier Foods PLC or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOL Hungarian Oil vs. Premier Foods PLC
Performance |
| Timeline |
| MOL Hungarian Oil |
| Premier Foods PLC |
MOL Hungarian and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOL Hungarian and Premier Foods
The main advantage of trading using opposite MOL Hungarian and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOL Hungarian position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| MOL Hungarian vs. GoldMining | MOL Hungarian vs. Blackrock World Mining | MOL Hungarian vs. Neometals | MOL Hungarian vs. Air Products Chemicals |
| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Toyota Motor Corp | Premier Foods vs. MOL Hungarian Oil |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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