Correlation Between Premiere Entertainment and Philex Mining

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

By analyzing existing cross correlation between Premiere Entertainment and Philex Mining Corp, you can compare the effects of market volatilities on Premiere Entertainment and Philex Mining 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 Premiere Entertainment with a short position of Philex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premiere Entertainment and Philex Mining.

Diversification Opportunities for Premiere Entertainment and Philex Mining

-0.41

Correlation Coefficient

Premiere Entertainment  Philex Mining

Very good diversification

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

Pair Corralation between Premiere Entertainment and Philex Mining

Assuming the 90 days trading horizon Premiere Entertainment is expected to generate 7.09 times less return on investment than Philex Mining. In addition to that, Premiere Entertainment is 1.19 times more volatile than Philex Mining Corp. It trades about 0.04 of its total potential returns per unit of risk. Philex Mining Corp is currently generating about 0.36 per unit of volatility. If you would invest  278.00  in Philex Mining Corp on December 31, 2024 and sell it today you would earn a total of  442.00  from holding Philex Mining Corp or generate 158.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Premiere Entertainment  vs.  Philex Mining Corp

Premiere Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Premiere Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Premiere Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Philex Mining Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Philex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premiere Entertainment and Philex Mining

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

The idea behind Premiere Entertainment and Philex Mining Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.