Correlation Between Aluminumof China and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and PREMIER FOODS, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and PREMIER FOODS.
Diversification Opportunities for Aluminumof China and PREMIER FOODS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aluminumof and PREMIER is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and Aluminumof China 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 Aluminum of 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 has no effect on the direction of Aluminumof China i.e., Aluminumof China and PREMIER FOODS go up and down completely randomly.
Pair Corralation between Aluminumof China and PREMIER FOODS
Assuming the 90 days horizon Aluminum of is expected to under-perform the PREMIER FOODS. In addition to that, Aluminumof China is 2.26 times more volatile than PREMIER FOODS. It trades about -0.11 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about -0.14 per unit of volatility. If you would invest 226.00 in PREMIER FOODS on October 11, 2024 and sell it today you would lose (8.00) from holding PREMIER FOODS or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. PREMIER FOODS
Performance |
| Timeline |
| Aluminumof China |
| PREMIER FOODS |
Aluminumof China and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and PREMIER FOODS
The main advantage of trading using opposite Aluminumof China and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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's long position.| Aluminumof China vs. PICKN PAY STORES | Aluminumof China vs. MARKET VECTR RETAIL | Aluminumof China vs. MOVIE GAMES SA | Aluminumof China vs. Warner Music Group |
| PREMIER FOODS vs. FIREWEED METALS P | PREMIER FOODS vs. Aluminum of | PREMIER FOODS vs. Hua Hong Semiconductor | PREMIER FOODS vs. ARDAGH METAL PACDL 0001 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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