Correlation Between Pact Group and Premier Investments

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

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

Diversification Opportunities for Pact Group and Premier Investments

-0.49

Correlation Coefficient

Pact Group  Premier Investments

Very good diversification

The 3 months correlation between Pact and Premier is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pact Group Holdings and Premier Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Investments and Pact Group 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 Pact Group Holdings 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 Pact Group i.e., Pact Group and Premier Investments go up and down completely randomly.

Pair Corralation between Pact Group and Premier Investments

Assuming the 90 days trading horizon Pact Group Holdings is expected to generate 0.75 times more return on investment than Premier Investments. However, Pact Group Holdings is 1.33 times less risky than Premier Investments. It trades about 0.18 of its potential returns per unit of risk. Premier Investments is currently generating about -0.14 per unit of risk. If you would invest  82.00  in Pact Group Holdings on December 27, 2024 and sell it today you would earn a total of  33.00  from holding Pact Group Holdings or generate 40.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Pact Group Holdings  vs.  Premier Investments

Pact Group Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pact Group Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Pact Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Premier Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pact Group and Premier Investments

The main advantage of trading using opposite Pact Group and Premier Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pact Group 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 Pact Group Holdings 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.