Correlation Between Premier African and Blue Star
Can any of the company-specific risk be diversified away by investing in both Premier African and Blue Star 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 Blue Star 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 Blue Star Capital, you can compare the effects of market volatilities on Premier African and Blue Star 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 Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Blue Star.
Diversification Opportunities for Premier African and Blue Star
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Blue is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital 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 Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of Premier African i.e., Premier African and Blue Star go up and down completely randomly.
Pair Corralation between Premier African and Blue Star
Assuming the 90 days trading horizon Premier African Minerals is expected to under-perform the Blue Star. But the stock apears to be less risky and, when comparing its historical volatility, Premier African Minerals is 13.66 times less risky than Blue Star. The stock trades about -0.04 of its potential returns per unit of risk. The Blue Star Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Blue Star Capital on November 6, 2024 and sell it today you would earn a total of 575.00 from holding Blue Star Capital or generate 230.0% 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. Blue Star Capital
Performance |
| Timeline |
| Premier African Minerals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Blue Star Capital |
Premier African and Blue Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Blue Star
The main advantage of trading using opposite Premier African and Blue Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Blue Star 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 Blue Star will offset losses from the drop in Blue Star's long position.| Premier African vs. Tata Steel Limited | Premier African vs. First Class Metals | Premier African vs. Dentsply Sirona | Premier African vs. Coeur Mining |
| Blue Star vs. Adriatic Metals | Blue Star vs. Silvercorp Metals | Blue Star vs. Finnair Oyj | Blue Star vs. Fair Oaks Income |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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