Correlation Between Century Pacific and Premiere Entertainment

Can any of the company-specific risk be diversified away by investing in both Century Pacific and Premiere Entertainment 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 Century Pacific and Premiere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Pacific Food and Premiere Entertainment, you can compare the effects of market volatilities on Century Pacific and Premiere Entertainment 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 Century Pacific with a short position of Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Pacific and Premiere Entertainment.

Diversification Opportunities for Century Pacific and Premiere Entertainment

-0.32

Correlation Coefficient

Century Pacific  Premiere Entertainment

Very good diversification

The 3 months correlation between Century and Premiere is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Century Pacific Food and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment and Century Pacific 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 Century Pacific Food are associated (or correlated) with Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Century Pacific i.e., Century Pacific and Premiere Entertainment go up and down completely randomly.

Pair Corralation between Century Pacific and Premiere Entertainment

Assuming the 90 days trading horizon Century Pacific Food is expected to generate 0.55 times more return on investment than Premiere Entertainment. However, Century Pacific Food is 1.82 times less risky than Premiere Entertainment. It trades about 0.07 of its potential returns per unit of risk. Premiere Entertainment is currently generating about -0.03 per unit of risk. If you would invest  2,476  in Century Pacific Food on October 5, 2024 and sell it today you would earn a total of  1,724  from holding Century Pacific Food or generate 69.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Century Pacific Food  vs.  Premiere Entertainment

Century Pacific Food

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Century Pacific Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Century Pacific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Premiere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premiere Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Century Pacific and Premiere Entertainment

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

The idea behind Century Pacific Food and Premiere Entertainment 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.