Correlation Between Ferrexpo PLC and Premier African

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

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

Diversification Opportunities for Ferrexpo PLC and Premier African

0.36

Correlation Coefficient

Ferrexpo PLC  Premier African

Weak diversification

The 3 months correlation between Ferrexpo and Premier is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo 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 Ferrexpo PLC 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 Ferrexpo 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 Ferrexpo PLC i.e., Ferrexpo PLC and Premier African go up and down completely randomly.

Pair Corralation between Ferrexpo PLC and Premier African

Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 1.41 times more return on investment than Premier African. However, Ferrexpo PLC is 1.41 times more volatile than Premier African Minerals. It trades about 0.03 of its potential returns per unit of risk. Premier African Minerals is currently generating about -0.3 per unit of risk. If you would invest  8,130  in Ferrexpo PLC on November 29, 2024 and sell it today you would lose (410.00) from holding Ferrexpo PLC or give up 5.04% of portfolio value over 90 days.

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

Ferrexpo PLC  vs.  Premier African Minerals

Ferrexpo PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrexpo PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ferrexpo PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Premier African Minerals

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ferrexpo PLC and Premier African

The main advantage of trading using opposite Ferrexpo PLC and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC 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 Ferrexpo 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.