Correlation Between PREMIER FOODS and Hirata
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and Hirata 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 PREMIER FOODS and Hirata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Hirata, you can compare the effects of market volatilities on PREMIER FOODS and Hirata 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 PREMIER FOODS with a short position of Hirata. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Hirata.
Diversification Opportunities for PREMIER FOODS and Hirata
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PREMIER and Hirata is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Hirata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirata and PREMIER FOODS 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 PREMIER FOODS are associated (or correlated) with Hirata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirata has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Hirata go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Hirata
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.55 times more return on investment than Hirata. However, PREMIER FOODS is 1.83 times less risky than Hirata. It trades about 0.1 of its potential returns per unit of risk. Hirata is currently generating about -0.04 per unit of risk. If you would invest 194.00 in PREMIER FOODS on September 14, 2024 and sell it today you would earn a total of 34.00 from holding PREMIER FOODS or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Hirata
Performance |
| Timeline |
| PREMIER FOODS |
| Hirata |
PREMIER FOODS and Hirata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Hirata
The main advantage of trading using opposite PREMIER FOODS and Hirata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Hirata 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 Hirata will offset losses from the drop in Hirata's long position.| PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc |
| Hirata vs. PREMIER FOODS | Hirata vs. CPU SOFTWAREHOUSE | Hirata vs. VITEC SOFTWARE GROUP | Hirata vs. ASSOC BR FOODS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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