Correlation Between Impala Platinum and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both Impala Platinum and PREMIER FOODS 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 Impala Platinum and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impala Platinum Holdings and PREMIER FOODS, you can compare the effects of market volatilities on Impala Platinum and PREMIER FOODS 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 Impala Platinum with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impala Platinum and PREMIER FOODS.
Diversification Opportunities for Impala Platinum and PREMIER FOODS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Impala and PREMIER is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and Impala Platinum 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 Impala Platinum Holdings are associated (or correlated) with PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Impala Platinum i.e., Impala Platinum and PREMIER FOODS go up and down completely randomly.
Pair Corralation between Impala Platinum and PREMIER FOODS
Assuming the 90 days trading horizon Impala Platinum Holdings is expected to generate 4.6 times more return on investment than PREMIER FOODS. However, Impala Platinum is 4.6 times more volatile than PREMIER FOODS. It trades about 0.04 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.1 per unit of risk. If you would invest 384.00 in Impala Platinum Holdings on September 14, 2024 and sell it today you would earn a total of 172.00 from holding Impala Platinum Holdings or generate 44.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impala Platinum Holdings vs. PREMIER FOODS
Performance |
| Timeline |
| Impala Platinum Holdings |
| PREMIER FOODS |
Impala Platinum and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impala Platinum and PREMIER FOODS
The main advantage of trading using opposite Impala Platinum and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impala Platinum position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| Impala Platinum vs. BHP Group Limited | Impala Platinum vs. Vale SA | Impala Platinum vs. Superior Plus Corp | Impala Platinum vs. SIVERS SEMICONDUCTORS AB |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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