Correlation Between Premier and Certara

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

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

Diversification Opportunities for Premier and Certara

0.01

Correlation Coefficient

Premier  Certara

Significant diversification

The 3 months correlation between Premier and Certara is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Premier and Certara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Certara and Premier 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 are associated (or correlated) with Certara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Certara has no effect on the direction of Premier i.e., Premier and Certara go up and down completely randomly.

Pair Corralation between Premier and Certara

Given the investment horizon of 90 days Premier is expected to under-perform the Certara. But the stock apears to be less risky and, when comparing its historical volatility, Premier is 1.25 times less risky than Certara. The stock trades about -0.05 of its potential returns per unit of risk. The Certara is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,054  in Certara on December 30, 2024 and sell it today you would lose (63.00) from holding Certara or give up 5.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Premier  vs.  Certara

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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Certara

Risk-Adjusted Performance

Very Weak

Over the last 90 days Certara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Certara is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Premier and Certara

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

The idea behind Premier and Certara 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.