Correlation Between Premier Foods and Calbee

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

By analyzing existing cross correlation between Premier Foods Plc and Calbee Inc, you can compare the effects of market volatilities on Premier Foods and Calbee 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 Premier Foods with a short position of Calbee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Calbee.

Diversification Opportunities for Premier Foods and Calbee

0.0

Correlation Coefficient

Premier Foods  Calbee

Pay attention - limited upside

The 3 months correlation between Premier and Calbee is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc and Premier Foods 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 Premier Foods Plc are associated (or correlated) with Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Premier Foods i.e., Premier Foods and Calbee go up and down completely randomly.

Pair Corralation between Premier Foods and Calbee

If you would invest (100.00) in Premier Foods Plc on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Premier Foods Plc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Premier Foods Plc  vs.  Calbee Inc

Premier Foods Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier Foods Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Premier Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Calbee Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Premier Foods and Calbee

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

The idea behind Premier Foods Plc and Calbee Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.