Correlation Between Premium Brands and V

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

Diversification Opportunities for Premium Brands and V

0.0

Correlation Coefficient

Premium Brands  V

Pay attention - limited upside

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

Pair Corralation between Premium Brands and V

If you would invest  5,600  in Premium Brands Holdings on December 26, 2024 and sell it today you would lose (9.00) from holding Premium Brands Holdings or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Premium Brands Holdings  vs.  V Group

Premium Brands Holdings

Risk-Adjusted Performance

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 nearly stable basic indicators, Premium Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

V Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, V is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Premium Brands and V

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

The idea behind Premium Brands Holdings and V Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.