Correlation Between Premier Investments and Aurum Resources
Can any of the company-specific risk be diversified away by investing in both Premier Investments and Aurum Resources 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 Investments and Aurum Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Aurum Resources, you can compare the effects of market volatilities on Premier Investments and Aurum Resources 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 Investments with a short position of Aurum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Aurum Resources.
Diversification Opportunities for Premier Investments and Aurum Resources
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and Aurum is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Aurum Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurum Resources and Premier Investments 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 Investments are associated (or correlated) with Aurum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurum Resources has no effect on the direction of Premier Investments i.e., Premier Investments and Aurum Resources go up and down completely randomly.
Pair Corralation between Premier Investments and Aurum Resources
Assuming the 90 days trading horizon Premier Investments is expected to generate 0.28 times more return on investment than Aurum Resources. However, Premier Investments is 3.56 times less risky than Aurum Resources. It trades about 0.17 of its potential returns per unit of risk. Aurum Resources is currently generating about -0.12 per unit of risk. If you would invest 3,314 in Premier Investments on September 13, 2024 and sell it today you would earn a total of 175.00 from holding Premier Investments or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Premier Investments vs. Aurum Resources
Performance |
| Timeline |
| Premier Investments |
| Aurum Resources |
Premier Investments and Aurum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Aurum Resources
The main advantage of trading using opposite Premier Investments and Aurum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments position performs unexpectedly, Aurum Resources 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 Aurum Resources will offset losses from the drop in Aurum Resources' long position.| Premier Investments vs. Hutchison Telecommunications | Premier Investments vs. Energy Resources | Premier Investments vs. GO2 People | Premier Investments vs. Pact Group Holdings |
| Aurum Resources vs. Farm Pride Foods | Aurum Resources vs. Collins Foods | Aurum Resources vs. Garda Diversified Ppty | Aurum Resources vs. Regal Investment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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