Correlation Between Premier Foods and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Southern Copper 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 Southern Copper 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 Southern Copper Corp, you can compare the effects of market volatilities on Premier Foods and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Southern Copper.
Diversification Opportunities for Premier Foods and Southern Copper
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Southern is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Premier Foods i.e., Premier Foods and Southern Copper go up and down completely randomly.
Pair Corralation between Premier Foods and Southern Copper
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.57 times more return on investment than Southern Copper. However, Premier Foods PLC is 1.74 times less risky than Southern Copper. It trades about -0.01 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.22 per unit of risk. If you would invest 19,220 in Premier Foods PLC on September 22, 2024 and sell it today you would lose (180.00) from holding Premier Foods PLC or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Southern Copper Corp
Performance |
| Timeline |
| Premier Foods PLC |
| Southern Copper Corp |
Premier Foods and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Southern Copper
The main advantage of trading using opposite Premier Foods and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor Corp |
| Southern Copper vs. Primary Health Properties | Southern Copper vs. Inspiration Healthcare Group | Southern Copper vs. Griffin Mining | Southern Copper vs. Spire Healthcare Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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