Correlation Between Molson Coors and Premier African

Can any of the company-specific risk be diversified away by investing in both Molson Coors and Premier African 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 Molson Coors and Premier African into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molson Coors Beverage and Premier African Minerals, you can compare the effects of market volatilities on Molson Coors and Premier African 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 Molson Coors with a short position of Premier African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Premier African.

Diversification Opportunities for Molson Coors and Premier African

0.13

Correlation Coefficient

Molson Coors  Premier African

Average diversification

The 3 months correlation between Molson and Premier is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Premier African Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier African Minerals and Molson Coors 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 Molson Coors Beverage are associated (or correlated) with Premier African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier African Minerals has no effect on the direction of Molson Coors i.e., Molson Coors and Premier African go up and down completely randomly.

Pair Corralation between Molson Coors and Premier African

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.29 times more return on investment than Premier African. However, Molson Coors Beverage is 3.5 times less risky than Premier African. It trades about -0.51 of its potential returns per unit of risk. Premier African Minerals is currently generating about -0.26 per unit of risk. If you would invest  6,189  in Molson Coors Beverage on October 12, 2024 and sell it today you would lose (831.00) from holding Molson Coors Beverage or give up 13.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Molson Coors Beverage  vs.  Premier African Minerals

Molson Coors Beverage

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Molson Coors Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molson Coors is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Premier African Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier African Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Premier African is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Molson Coors and Premier African

The main advantage of trading using opposite Molson Coors and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Premier African 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 Premier African will offset losses from the drop in Premier African's long position.

The idea behind Molson Coors Beverage and Premier African Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.