Correlation Between Premium Brands and Paranovus Entertainment

Can any of the company-specific risk be diversified away by investing in both Premium Brands and Paranovus Entertainment 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 Paranovus Entertainment 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 Paranovus Entertainment Technology, you can compare the effects of market volatilities on Premium Brands and Paranovus Entertainment 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 Paranovus Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Brands and Paranovus Entertainment.

Diversification Opportunities for Premium Brands and Paranovus Entertainment

-0.67

Correlation Coefficient

Premium Brands  Paranovus Entertainment

Excellent diversification

The 3 months correlation between Premium and Paranovus is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Paranovus Entertainment Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paranovus Entertainment 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 Paranovus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paranovus Entertainment has no effect on the direction of Premium Brands i.e., Premium Brands and Paranovus Entertainment go up and down completely randomly.

Pair Corralation between Premium Brands and Paranovus Entertainment

Assuming the 90 days horizon Premium Brands is expected to generate 7.57 times less return on investment than Paranovus Entertainment. But when comparing it to its historical volatility, Premium Brands Holdings is 2.9 times less risky than Paranovus Entertainment. It trades about 0.01 of its potential returns per unit of risk. Paranovus Entertainment Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  259.00  in Paranovus Entertainment Technology on September 28, 2024 and sell it today you would lose (127.00) from holding Paranovus Entertainment Technology or give up 49.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.85%
Values	Daily Returns

Premium Brands Holdings  vs.  Paranovus Entertainment Techno

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.

Paranovus Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paranovus Entertainment Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Paranovus Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premium Brands and Paranovus Entertainment

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

The idea behind Premium Brands Holdings and Paranovus Entertainment Technology 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.