Correlation Between Mistras and Premium Catering

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

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

Diversification Opportunities for Mistras and Premium Catering

0.69

Correlation Coefficient

Mistras  Premium Catering

Poor diversification

The 3 months correlation between Mistras and Premium is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Premium Catering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Catering and Mistras 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 Mistras Group are associated (or correlated) with Premium Catering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Catering has no effect on the direction of Mistras i.e., Mistras and Premium Catering go up and down completely randomly.

Pair Corralation between Mistras and Premium Catering

Allowing for the 90-day total investment horizon Mistras is expected to generate 4.42 times less return on investment than Premium Catering. But when comparing it to its historical volatility, Mistras Group is 3.92 times less risky than Premium Catering. It trades about 0.12 of its potential returns per unit of risk. Premium Catering Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Premium Catering Limited on September 18, 2024 and sell it today you would earn a total of  10.06  from holding Premium Catering Limited or generate 15.24% return on investment over 90 days.

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

Mistras Group  vs.  Premium Catering Limited

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Premium Catering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Catering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental 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.

Pair Trading with Mistras and Premium Catering

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

The idea behind Mistras Group and Premium Catering Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.