Correlation Between Premier Foods and Systemair
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Systemair 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 Systemair 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 Systemair AB, you can compare the effects of market volatilities on Premier Foods and Systemair 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 Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Systemair.
Diversification Opportunities for Premier Foods and Systemair
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Premier and Systemair is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Premier Foods i.e., Premier Foods and Systemair go up and down completely randomly.
Pair Corralation between Premier Foods and Systemair
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.96 times more return on investment than Systemair. However, Premier Foods PLC is 1.05 times less risky than Systemair. It trades about -0.25 of its potential returns per unit of risk. Systemair AB is currently generating about -0.39 per unit of risk. If you would invest 18,900 in Premier Foods PLC on October 18, 2024 and sell it today you would lose (1,120) from holding Premier Foods PLC or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Systemair AB
Performance |
| Timeline |
| Premier Foods PLC |
| Systemair AB |
Premier Foods and Systemair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Systemair
The main advantage of trading using opposite Premier Foods and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.| Premier Foods vs. STMicroelectronics NV | Premier Foods vs. Associated British Foods | Premier Foods vs. Supermarket Income REIT | Premier Foods vs. Discover Financial Services |
| Systemair vs. Premier Foods PLC | Systemair vs. Bell Food Group | Systemair vs. Travel Leisure Co | Systemair vs. Axfood AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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