Correlation Between Allhome Corp and Premiere Entertainment

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

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

Diversification Opportunities for Allhome Corp and Premiere Entertainment

0.61

Correlation Coefficient

Allhome Corp  Premiere Entertainment

Poor diversification

The 3 months correlation between Allhome and Premiere is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Allhome Corp and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment and Allhome Corp 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 Allhome Corp 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 Allhome Corp i.e., Allhome Corp and Premiere Entertainment go up and down completely randomly.

Pair Corralation between Allhome Corp and Premiere Entertainment

Assuming the 90 days trading horizon Allhome Corp is expected to under-perform the Premiere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Allhome Corp is 1.29 times less risky than Premiere Entertainment. The stock trades about -0.04 of its potential returns per unit of risk. The Premiere Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Premiere Entertainment on October 9, 2024 and sell it today you would lose (12.00) from holding Premiere Entertainment or give up 41.38% of portfolio value over 90 days.

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

Allhome Corp  vs.  Premiere Entertainment

Allhome Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Allhome Corp and Premiere Entertainment

The main advantage of trading using opposite Allhome Corp and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allhome Corp 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 Allhome Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.