Correlation Between Premier African and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Premier African and Litigation 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 Litigation 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 Litigation Capital Management, you can compare the effects of market volatilities on Premier African and Litigation 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Litigation Capital.
Diversification Opportunities for Premier African and Litigation Capital
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Litigation is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Premier African i.e., Premier African and Litigation Capital go up and down completely randomly.
Pair Corralation between Premier African and Litigation Capital
Assuming the 90 days trading horizon Premier African Minerals is expected to generate 8.07 times more return on investment than Litigation Capital. However, Premier African is 8.07 times more volatile than Litigation Capital Management. It trades about 0.16 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.23 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 1.48 from holding Premier African Minerals or generate 42.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier African Minerals vs. Litigation Capital Management
Performance |
| Timeline |
| Premier African Minerals |
| Litigation Capital |
Premier African and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Litigation Capital
The main advantage of trading using opposite Premier African and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Litigation 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 Litigation Capital will offset losses from the drop in Litigation 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 |
| Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Hyundai Motor | Litigation Capital vs. Toyota Motor Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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