Correlation Between Premium Catering and Samfine Creation

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

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

Diversification Opportunities for Premium Catering and Samfine Creation

-0.41

Correlation Coefficient

Premium Catering  Samfine Creation

Very good diversification

The 3 months correlation between Premium and Samfine is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Premium Catering Limited and Samfine Creation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samfine Creation Holdings and Premium Catering 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 Catering Limited are associated (or correlated) with Samfine Creation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samfine Creation Holdings has no effect on the direction of Premium Catering i.e., Premium Catering and Samfine Creation go up and down completely randomly.

Pair Corralation between Premium Catering and Samfine Creation

Allowing for the 90-day total investment horizon Premium Catering Limited is expected to generate 0.73 times more return on investment than Samfine Creation. However, Premium Catering Limited is 1.36 times less risky than Samfine Creation. It trades about 0.1 of its potential returns per unit of risk. Samfine Creation Holdings is currently generating about -0.07 per unit of risk. If you would invest  69.00  in Premium Catering Limited on December 29, 2024 and sell it today you would earn a total of  20.00  from holding Premium Catering Limited or generate 28.99% return on investment over 90 days.

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

Premium Catering Limited  vs.  Samfine Creation Holdings

Premium Catering

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Catering Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Premium Catering exhibited solid returns over the last few months and may actually be approaching a breakup point.

Samfine Creation Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Premium Catering and Samfine Creation

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

The idea behind Premium Catering Limited and Samfine Creation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.