Correlation Between Premier African and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Premier African and SANTANDER 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 SANTANDER 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 SANTANDER UK 8, you can compare the effects of market volatilities on Premier African and SANTANDER 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 SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier African and SANTANDER.
Diversification Opportunities for Premier African and SANTANDER
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and SANTANDER is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 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 SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of Premier African i.e., Premier African and SANTANDER go up and down completely randomly.
Pair Corralation between Premier African and SANTANDER
Assuming the 90 days trading horizon Premier African Minerals is expected to generate 72.28 times more return on investment than SANTANDER. However, Premier African is 72.28 times more volatile than SANTANDER UK 8. It trades about 0.17 of its potential returns per unit of risk. SANTANDER UK 8 is currently generating about -0.17 per unit of risk. If you would invest 4.05 in Premier African Minerals on September 5, 2024 and sell it today you would earn a total of 1.80 from holding Premier African Minerals or generate 44.44% 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. SANTANDER UK 8
Performance |
| Timeline |
| Premier African Minerals |
| SANTANDER UK 8 |
Premier African and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier African and SANTANDER
The main advantage of trading using opposite Premier African and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier African position performs unexpectedly, SANTANDER 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 SANTANDER will offset losses from the drop in SANTANDER's long position.| Premier African vs. Antofagasta PLC | Premier African vs. Atalaya Mining | Premier African vs. Ferrexpo PLC | Premier African vs. Amaroq Minerals |
| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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