Correlation Between Phreesia and Premier

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

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

Diversification Opportunities for Phreesia and Premier

-0.55

Correlation Coefficient

Phreesia  Premier

Excellent diversification

The 3 months correlation between Phreesia and Premier is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Phreesia and Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier and Phreesia 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 Phreesia are associated (or correlated) with Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier has no effect on the direction of Phreesia i.e., Phreesia and Premier go up and down completely randomly.

Pair Corralation between Phreesia and Premier

Considering the 90-day investment horizon Phreesia is expected to generate 1.41 times more return on investment than Premier. However, Phreesia is 1.41 times more volatile than Premier. It trades about 0.16 of its potential returns per unit of risk. Premier is currently generating about -0.04 per unit of risk. If you would invest  1,961  in Phreesia on November 19, 2024 and sell it today you would earn a total of  1,023  from holding Phreesia or generate 52.17% return on investment over 90 days.

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

Phreesia  vs.  Premier

Phreesia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Phreesia are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Phreesia reported solid returns over the last few months and may actually be approaching a breakup point.

Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Phreesia and Premier

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

The idea behind Phreesia and Premier 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..