Correlation Between Integral and Premium Catering
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Integral Ad Science vs. Premium Catering Limited
Performance |
Timeline |
Integral Ad Science |
Premium Catering |
Integral and Premium Catering Volatility Contrast
Predicted Return Density |
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.Premium Catering vs. El Pollo Loco | ||
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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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