Correlation Between Kinaxis and Premium Brands

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

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

Diversification Opportunities for Kinaxis and Premium Brands

0.32

Correlation Coefficient

Kinaxis  Premium Brands

Weak diversification

The 3 months correlation between Kinaxis and Premium is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kinaxis and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings and Kinaxis 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 Kinaxis are associated (or correlated) with Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Kinaxis i.e., Kinaxis and Premium Brands go up and down completely randomly.

Pair Corralation between Kinaxis and Premium Brands

Assuming the 90 days trading horizon Kinaxis is expected to under-perform the Premium Brands. In addition to that, Kinaxis is 1.29 times more volatile than Premium Brands Holdings. It trades about -0.09 of its total potential returns per unit of risk. Premium Brands Holdings is currently generating about 0.0 per unit of volatility. If you would invest  7,924  in Premium Brands Holdings on December 23, 2024 and sell it today you would lose (52.00) from holding Premium Brands Holdings or give up 0.66% of portfolio value over 90 days.

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

Kinaxis  vs.  Premium Brands Holdings

Kinaxis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinaxis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Premium Brands Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Premium Brands is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kinaxis and Premium Brands

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

The idea behind Kinaxis and Premium Brands Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.