Correlation Between Premier African and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Premier African and Polar 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 Polar 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 Polar Capital Technology, you can compare the effects of market volatilities on Premier African and Polar 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 Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and Polar Capital.
Diversification Opportunities for Premier African and Polar Capital
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Polar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology 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 Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Premier African i.e., Premier African and Polar Capital go up and down completely randomly.
Pair Corralation between Premier African and Polar Capital
Assuming the 90 days trading horizon Premier African Minerals is expected to generate 11.64 times more return on investment than Polar Capital. However, Premier African is 11.64 times more volatile than Polar Capital Technology. It trades about 0.15 of its potential returns per unit of risk. Polar Capital Technology is currently generating about 0.05 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. Polar Capital Technology
Performance |
| Timeline |
| Premier African Minerals |
| Polar Capital Technology |
Premier African and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and Polar Capital
The main advantage of trading using opposite Premier African and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, Polar 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 Polar Capital will offset losses from the drop in Polar 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 |
| Polar Capital vs. Beowulf Mining | Polar Capital vs. Atalaya Mining | Polar Capital vs. Caledonia Mining | Polar Capital vs. Cairo Communication SpA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |