Correlation Between 4Imprint Group and Premier Foods

Can any of the company-specific risk be diversified away by investing in both 4Imprint Group and Premier Foods 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 4Imprint Group and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Imprint Group Plc and Premier Foods PLC, you can compare the effects of market volatilities on 4Imprint Group and Premier Foods 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 4Imprint Group with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Imprint Group and Premier Foods.

Diversification Opportunities for 4Imprint Group and Premier Foods

0.35

Correlation Coefficient

4Imprint Group  Premier Foods

Weak diversification

The 3 months correlation between 4Imprint and Premier is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding 4Imprint Group Plc and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and 4Imprint Group 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 4Imprint Group Plc are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of 4Imprint Group i.e., 4Imprint Group and Premier Foods go up and down completely randomly.

Pair Corralation between 4Imprint Group and Premier Foods

Assuming the 90 days trading horizon 4Imprint Group is expected to generate 1.81 times less return on investment than Premier Foods. In addition to that, 4Imprint Group is 2.01 times more volatile than Premier Foods PLC. It trades about 0.03 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.1 per unit of volatility. If you would invest  18,880  in Premier Foods PLC on September 4, 2024 and sell it today you would earn a total of  520.00  from holding Premier Foods PLC or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

4Imprint Group Plc  vs.  Premier Foods PLC

4Imprint Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Imprint Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 4Imprint Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Premier Foods PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Foods PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Premier Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 4Imprint Group and Premier Foods

The main advantage of trading using opposite 4Imprint Group and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Imprint Group position performs unexpectedly, Premier Foods 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 Foods will offset losses from the drop in Premier Foods' long position.

The idea behind 4Imprint Group Plc and Premier Foods PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.