Correlation Between INDIKA ENERGY and PREMIER FOODS

Can any of the company-specific risk be diversified away by investing in both INDIKA ENERGY 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 INDIKA ENERGY and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for INDIKA ENERGY and PREMIER FOODS

-0.41

Correlation Coefficient

INDIKA ENERGY  PREMIER FOODS

Very good diversification

The 3 months correlation between INDIKA and PREMIER is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and INDIKA ENERGY 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 INDIKA ENERGY 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 has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and PREMIER FOODS go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and PREMIER FOODS

Assuming the 90 days trading horizon INDIKA ENERGY is expected to generate 22.24 times less return on investment than PREMIER FOODS. In addition to that, INDIKA ENERGY is 3.51 times more volatile than PREMIER FOODS. It trades about 0.0 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about 0.09 per unit of volatility. If you would invest  128.00  in PREMIER FOODS on September 29, 2024 and sell it today you would earn a total of  98.00  from holding PREMIER FOODS or generate 76.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

INDIKA ENERGY  vs.  PREMIER FOODS

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PREMIER FOODS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PREMIER FOODS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with INDIKA ENERGY and PREMIER FOODS

The main advantage of trading using opposite INDIKA ENERGY and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY 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's long position.

The idea behind INDIKA ENERGY and PREMIER FOODS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.