Correlation Between Premier Investments and Native Mineral

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

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

Diversification Opportunities for Premier Investments and Native Mineral

-0.03

Correlation Coefficient

Premier Investments  Native Mineral

Good diversification

The 3 months correlation between Premier and Native is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Native Mineral Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Native Mineral Resources and Premier Investments 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 Investments are associated (or correlated) with Native Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Native Mineral Resources has no effect on the direction of Premier Investments i.e., Premier Investments and Native Mineral go up and down completely randomly.

Pair Corralation between Premier Investments and Native Mineral

Assuming the 90 days trading horizon Premier Investments is expected to generate 5.23 times less return on investment than Native Mineral. But when comparing it to its historical volatility, Premier Investments is 3.04 times less risky than Native Mineral. It trades about 0.09 of its potential returns per unit of risk. Native Mineral Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Native Mineral Resources on October 7, 2024 and sell it today you would earn a total of  1.50  from holding Native Mineral Resources or generate 60.0% return on investment over 90 days.

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

Premier Investments  vs.  Native Mineral Resources

Premier Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Premier Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Native Mineral Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Native Mineral Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Native Mineral unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Investments and Native Mineral

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

The idea behind Premier Investments and Native Mineral Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.