Correlation Between Integral and Premium Catering

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Can any of the company-specific risk be diversified away by investing in both Integral and Premium Catering 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 Integral and Premium Catering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integral Ad Science and Premium Catering Limited, you can compare the effects of market volatilities on Integral and Premium Catering 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 Integral with a short position of Premium Catering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Premium Catering.

Diversification Opportunities for Integral and Premium Catering

IntegralPremiumDiversified AwayIntegralPremiumDiversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Integral and Premium is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Premium Catering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Catering and Integral 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 Integral Ad Science are associated (or correlated) with Premium Catering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Catering has no effect on the direction of Integral i.e., Integral and Premium Catering go up and down completely randomly.

Pair Corralation between Integral and Premium Catering

Considering the 90-day investment horizon Integral is expected to generate 2.4 times less return on investment than Premium Catering. But when comparing it to its historical volatility, Integral Ad Science is 7.04 times less risky than Premium Catering. It trades about 0.18 of its potential returns per unit of risk. Premium Catering Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Premium Catering Limited on November 20, 2024 and sell it today you would earn a total of  3.00  from holding Premium Catering Limited or generate 3.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Integral Ad Science  vs.  Premium Catering Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010203040
JavaScript chart by amCharts 3.21.15IAS PC
       Timeline  
Integral Ad Science 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1010.51111.5
Premium Catering 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Premium Catering Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Premium Catering exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.650.70.750.80.850.90.951

Integral and Premium Catering Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.31-3.23-2.15-1.070.00.961.952.943.934.92 0.010.020.030.040.050.06
JavaScript chart by amCharts 3.21.15IAS PC
       Returns  

Pair Trading with Integral and Premium Catering

The main advantage of trading using opposite Integral and Premium Catering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral position performs unexpectedly, Premium Catering 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 Premium Catering will offset losses from the drop in Premium Catering's long position.
The idea behind Integral Ad Science and Premium Catering Limited 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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