Correlation Between Premier African and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Premier African and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Premier African and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Intermediate Capital.
Diversification Opportunities for Premier African and Intermediate Capital
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Premier and Intermediate is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Premier African i.e., Premier African and Intermediate Capital go up and down completely randomly.
Pair Corralation between Premier African and Intermediate Capital
Assuming the 90 days trading horizon Premier African Minerals is expected to under-perform the Intermediate Capital. In addition to that, Premier African is 4.15 times more volatile than Intermediate Capital Group. It trades about -0.02 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.09 per unit of volatility. If you would invest 104,105 in Intermediate Capital Group on September 12, 2024 and sell it today you would earn a total of 116,495 from holding Intermediate Capital Group or generate 111.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier African Minerals vs. Intermediate Capital Group
Performance |
| Timeline |
| Premier African Minerals |
| Intermediate Capital |
Premier African and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Intermediate Capital
The main advantage of trading using opposite Premier African and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital'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 |
| Intermediate Capital vs. Fresenius Medical Care | Intermediate Capital vs. Litigation Capital Management | Intermediate Capital vs. Centaur Media | Intermediate Capital vs. MediaZest 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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