Correlation Between Endo International and Premier African

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

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

Diversification Opportunities for Endo International and Premier African

-0.19

Correlation Coefficient

Endo International  Premier African

Good diversification

The 3 months correlation between Endo and Premier is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Endo International PLC 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 Endo International 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 Endo International PLC 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 Endo International i.e., Endo International and Premier African go up and down completely randomly.

Pair Corralation between Endo International and Premier African

Assuming the 90 days trading horizon Endo International PLC is expected to under-perform the Premier African. But the stock apears to be less risky and, when comparing its historical volatility, Endo International PLC is 11.42 times less risky than Premier African. The stock trades about -0.24 of its potential returns per unit of risk. The Premier African Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.25  in Premier African Minerals on September 29, 2024 and sell it today you would earn a total of  1.80  from holding Premier African Minerals or generate 55.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Endo International PLC  vs.  Premier African Minerals

Endo International PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endo International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Premier African Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier African Minerals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Premier African unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endo International and Premier African

The main advantage of trading using opposite Endo International and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endo International 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 Endo International PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.