Correlation Between Medibank Private and Premier Investments

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Medibank Private and Premier Investments 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 Medibank Private and Premier Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Premier Investments, you can compare the effects of market volatilities on Medibank Private and Premier Investments 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 Medibank Private with a short position of Premier Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Premier Investments.

Diversification Opportunities for Medibank Private and Premier Investments

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Medibank and Premier is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Premier Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Investments and Medibank Private 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 Medibank Private are associated (or correlated) with Premier Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Investments has no effect on the direction of Medibank Private i.e., Medibank Private and Premier Investments go up and down completely randomly.

Pair Corralation between Medibank Private and Premier Investments

Assuming the 90 days trading horizon Medibank Private is expected to generate 0.58 times more return on investment than Premier Investments. However, Medibank Private is 1.73 times less risky than Premier Investments. It trades about -0.1 of its potential returns per unit of risk. Premier Investments is currently generating about -0.33 per unit of risk. If you would invest  387.00  in Medibank Private on October 8, 2024 and sell it today you would lose (5.00) from holding Medibank Private or give up 1.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Medibank Private  vs.  Premier Investments

 Performance 
       Timeline  
Medibank Private 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Medibank Private are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Medibank Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Premier Investments 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Premier Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Premier Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Medibank Private and Premier Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medibank Private and Premier Investments

The main advantage of trading using opposite Medibank Private and Premier Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, Premier Investments 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 Investments will offset losses from the drop in Premier Investments' long position.
The idea behind Medibank Private and Premier Investments 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.
Check out your portfolio center.
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 CEOs Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Fundamental Analysis
View fundamental data based on most recent published financial statements
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine