Correlation Between Premium Brands and Exco Technologies
Can any of the company-specific risk be diversified away by investing in both Premium Brands and Exco Technologies 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 Premium Brands and Exco Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Brands Holdings and Exco Technologies Limited, you can compare the effects of market volatilities on Premium Brands and Exco Technologies 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 Premium Brands with a short position of Exco Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Brands and Exco Technologies.
Diversification Opportunities for Premium Brands and Exco Technologies
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premium and Exco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Premium Brands 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 Premium Brands Holdings are associated (or correlated) with Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of Premium Brands i.e., Premium Brands and Exco Technologies go up and down completely randomly.
Pair Corralation between Premium Brands and Exco Technologies
Assuming the 90 days trading horizon Premium Brands Holdings is expected to under-perform the Exco Technologies. In addition to that, Premium Brands is 1.88 times more volatile than Exco Technologies Limited. It trades about -0.29 of its total potential returns per unit of risk. Exco Technologies Limited is currently generating about -0.08 per unit of volatility. If you would invest 878.00 in Exco Technologies Limited on August 28, 2024 and sell it today you would lose (17.00) from holding Exco Technologies Limited or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Brands Holdings vs. Exco Technologies Limited
Performance |
| Timeline |
| Premium Brands Holdings |
| Exco Technologies |
Premium Brands and Exco Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Brands and Exco Technologies
The main advantage of trading using opposite Premium Brands and Exco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Brands position performs unexpectedly, Exco Technologies 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 Exco Technologies will offset losses from the drop in Exco Technologies' long position.| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService Corp |
| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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