Correlation Between Premier Products and CLST Holdings

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

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

Diversification Opportunities for Premier Products and CLST Holdings

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Correlation Coefficient

Premier Products  CLST Holdings

Pay attention - limited upside

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

Pair Corralation between Premier Products and CLST Holdings

Given the investment horizon of 90 days Premier Products is expected to generate 4.26 times less return on investment than CLST Holdings. But when comparing it to its historical volatility, Premier Products Group is 1.87 times less risky than CLST Holdings. It trades about 0.06 of its potential returns per unit of risk. CLST Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.35  in CLST Holdings on September 10, 2024 and sell it today you would earn a total of  1.05  from holding CLST Holdings or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	81.41%
Values	Daily Returns

Premier Products Group  vs.  CLST Holdings

Premier Products

Risk-Adjusted Performance

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Very Weak

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

CLST Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLST Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady technical indicators, CLST Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Premier Products and CLST Holdings

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

The idea behind Premier Products Group and CLST Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.