Correlation Between Premium Brands and Beyond Oil

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

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

Diversification Opportunities for Premium Brands and Beyond Oil

0.62

Correlation Coefficient

Premium Brands  Beyond Oil

Poor diversification

The 3 months correlation between Premium and Beyond is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Beyond Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Oil and Premium Brands 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 Premium Brands Holdings are associated (or correlated) with Beyond Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Oil has no effect on the direction of Premium Brands i.e., Premium Brands and Beyond Oil go up and down completely randomly.

Pair Corralation between Premium Brands and Beyond Oil

Assuming the 90 days horizon Premium Brands Holdings is expected to under-perform the Beyond Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premium Brands Holdings is 2.9 times less risky than Beyond Oil. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Beyond Oil is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Beyond Oil on September 28, 2024 and sell it today you would earn a total of  25.00  from holding Beyond Oil or generate 32.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.64%
Values	Daily Returns

Premium Brands Holdings  vs.  Beyond Oil

Premium Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Beyond Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Premium Brands and Beyond Oil

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

The idea behind Premium Brands Holdings and Beyond Oil 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.