Correlation Between Premium Brands and Kinaxis

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

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

Diversification Opportunities for Premium Brands and Kinaxis

0.32

Correlation Coefficient

Premium Brands  Kinaxis

Weak diversification

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

Pair Corralation between Premium Brands and Kinaxis

Assuming the 90 days trading horizon Premium Brands Holdings is expected to generate 0.77 times more return on investment than Kinaxis. However, Premium Brands Holdings is 1.29 times less risky than Kinaxis. It trades about 0.0 of its potential returns per unit of risk. Kinaxis is currently generating about -0.09 per unit of risk. 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

Premium Brands Holdings  vs.  Kinaxis

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.

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.

Pair Trading with Premium Brands and Kinaxis

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

The idea behind Premium Brands Holdings and Kinaxis 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.