Correlation Between Integrated Micro and Premiere Entertainment

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

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

Diversification Opportunities for Integrated Micro and Premiere Entertainment

0.68

Correlation Coefficient

Integrated Micro  Premiere Entertainment

Poor diversification

The 3 months correlation between Integrated and Premiere is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Micro Electronics and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment and Integrated Micro 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 Integrated Micro Electronics 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 Integrated Micro i.e., Integrated Micro and Premiere Entertainment go up and down completely randomly.

Pair Corralation between Integrated Micro and Premiere Entertainment

Assuming the 90 days trading horizon Integrated Micro Electronics is expected to under-perform the Premiere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Integrated Micro Electronics is 1.33 times less risky than Premiere Entertainment. The stock trades about -0.08 of its potential returns per unit of risk. The Premiere Entertainment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Premiere Entertainment on October 10, 2024 and sell it today you would lose (21.00) from holding Premiere Entertainment or give up 55.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.37%
Values	Daily Returns

Integrated Micro Electronics  vs.  Premiere Entertainment

Integrated Micro Ele

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Micro Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

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 Integrated Micro and Premiere Entertainment

The main advantage of trading using opposite Integrated Micro and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Micro 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 Integrated Micro Electronics 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.