Correlation Between Premier African and Baring Emerging
Can any of the company-specific risk be diversified away by investing in both Premier African and Baring Emerging 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 Baring Emerging 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 Baring Emerging Europe, you can compare the effects of market volatilities on Premier African and Baring Emerging 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 Baring Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Baring Emerging.
Diversification Opportunities for Premier African and Baring Emerging
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Baring is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Baring Emerging Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baring Emerging Europe 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 Baring Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baring Emerging Europe has no effect on the direction of Premier African i.e., Premier African and Baring Emerging go up and down completely randomly.
Pair Corralation between Premier African and Baring Emerging
Assuming the 90 days trading horizon Premier African Minerals is expected to generate 19.65 times more return on investment than Baring Emerging. However, Premier African is 19.65 times more volatile than Baring Emerging Europe. It trades about 0.15 of its potential returns per unit of risk. Baring Emerging Europe is currently generating about 0.31 per unit of risk. If you would invest 3.47 in Premier African Minerals on September 12, 2024 and sell it today you would earn a total of 1.23 from holding Premier African Minerals or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier African Minerals vs. Baring Emerging Europe
Performance |
| Timeline |
| Premier African Minerals |
| Baring Emerging Europe |
Premier African and Baring Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Baring Emerging
The main advantage of trading using opposite Premier African and Baring Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Baring Emerging 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 Baring Emerging will offset losses from the drop in Baring Emerging's long position.| Premier African vs. Check Point Software | Premier African vs. SMA Solar Technology | Premier African vs. PureTech Health plc | Premier African vs. Automatic Data Processing |
| Baring Emerging vs. Endeavour Mining Corp | Baring Emerging vs. Waste Management | Baring Emerging vs. Infrastrutture Wireless Italiane | Baring Emerging vs. Metals Exploration 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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