Correlation Between PREMIER FOODS and Northern Data
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and Northern Data 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 Northern Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Northern Data AG, you can compare the effects of market volatilities on PREMIER FOODS and Northern Data 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 Northern Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Northern Data.
Diversification Opportunities for PREMIER FOODS and Northern Data
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PREMIER and Northern is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Northern Data AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Data AG 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 Northern Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Data AG has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Northern Data go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Northern Data
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 1.03 times more return on investment than Northern Data. However, PREMIER FOODS is 1.03 times more volatile than Northern Data AG. It trades about 0.01 of its potential returns per unit of risk. Northern Data AG is currently generating about -0.19 per unit of risk. If you would invest 226.00 in PREMIER FOODS on November 8, 2024 and sell it today you would earn a total of 0.00 from holding PREMIER FOODS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Northern Data AG
Performance |
| Timeline |
| PREMIER FOODS |
| Northern Data AG |
PREMIER FOODS and Northern Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Northern Data
The main advantage of trading using opposite PREMIER FOODS and Northern Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Northern Data 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 Northern Data will offset losses from the drop in Northern Data's long position.| PREMIER FOODS vs. Beta Systems Software | PREMIER FOODS vs. Casio Computer CoLtd | PREMIER FOODS vs. Kingdee International Software | PREMIER FOODS vs. Meli Hotels International |
| Northern Data vs. Samsung Electronics Co | Northern Data vs. Samsung Electronics Co | Northern Data vs. Samsung Electronics Co | Northern Data vs. Samsung Electronics Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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