Correlation Between Premier Foods and Mhlbauer Holding
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Mhlbauer Holding 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 Mhlbauer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods PLC and Mhlbauer Holding AG, you can compare the effects of market volatilities on Premier Foods and Mhlbauer Holding 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 Mhlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Mhlbauer Holding.
Diversification Opportunities for Premier Foods and Mhlbauer Holding
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and Mhlbauer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mhlbauer Holding 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 PLC are associated (or correlated) with Mhlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mhlbauer Holding has no effect on the direction of Premier Foods i.e., Premier Foods and Mhlbauer Holding go up and down completely randomly.
Pair Corralation between Premier Foods and Mhlbauer Holding
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.83 times more return on investment than Mhlbauer Holding. However, Premier Foods PLC is 1.21 times less risky than Mhlbauer Holding. It trades about 0.12 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.07 per unit of risk. If you would invest 148.00 in Premier Foods PLC on September 4, 2024 and sell it today you would earn a total of 80.00 from holding Premier Foods PLC or generate 54.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Mhlbauer Holding AG
Performance |
| Timeline |
| Premier Foods PLC |
| Mhlbauer Holding |
Premier Foods and Mhlbauer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Mhlbauer Holding
The main advantage of trading using opposite Premier Foods and Mhlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Mhlbauer Holding 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 Mhlbauer Holding will offset losses from the drop in Mhlbauer Holding's long position.The idea behind Premier Foods PLC and Mhlbauer Holding AG 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.| Mhlbauer Holding vs. JIAHUA STORES | Mhlbauer Holding vs. Lifeway Foods | Mhlbauer Holding vs. National Retail Properties | Mhlbauer Holding vs. Premier Foods PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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