Correlation Between Premier African and Apax Global
Can any of the company-specific risk be diversified away by investing in both Premier African and Apax Global 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 African and Apax Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier African Minerals and Apax Global Alpha, you can compare the effects of market volatilities on Premier African and Apax Global 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 African with a short position of Apax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Apax Global.
Diversification Opportunities for Premier African and Apax Global
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Apax is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Apax Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apax Global Alpha and Premier African 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 African Minerals are associated (or correlated) with Apax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apax Global Alpha has no effect on the direction of Premier African i.e., Premier African and Apax Global go up and down completely randomly.
Pair Corralation between Premier African and Apax Global
Assuming the 90 days trading horizon Premier African Minerals is expected to generate 9.9 times more return on investment than Apax Global. However, Premier African is 9.9 times more volatile than Apax Global Alpha. It trades about 0.05 of its potential returns per unit of risk. Apax Global Alpha is currently generating about -0.16 per unit of risk. If you would invest 3.60 in Premier African Minerals on January 16, 2025 and sell it today you would lose (0.45) from holding Premier African Minerals or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Premier African Minerals vs. Apax Global Alpha
Performance |
| Timeline |
| Premier African Minerals |
| Apax Global Alpha |
Premier African and Apax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Apax Global
The main advantage of trading using opposite Premier African and Apax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Apax Global 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 Apax Global will offset losses from the drop in Apax Global's long position.| Premier African vs. Roebuck Food Group | Premier African vs. Samsung Electronics Co | Premier African vs. Arrow Electronics | Premier African vs. Dairy Farm International |
| Apax Global vs. Cardinal Health | Apax Global vs. Mineral Financial Investments | Apax Global vs. The Mercantile Investment | Apax Global vs. OneSavings Bank PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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