Correlation Between Premier African and XLMedia PLC

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

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

Diversification Opportunities for Premier African and XLMedia PLC

-0.22

Correlation Coefficient

Premier African  XLMedia PLC

Very good diversification

The 3 months correlation between Premier and XLMedia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Premier African Minerals and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Premier African 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 African Minerals are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Premier African i.e., Premier African and XLMedia PLC go up and down completely randomly.

Pair Corralation between Premier African and XLMedia PLC

Assuming the 90 days trading horizon Premier African Minerals is expected to generate 0.89 times more return on investment than XLMedia PLC. However, Premier African Minerals is 1.12 times less risky than XLMedia PLC. It trades about -0.26 of its potential returns per unit of risk. XLMedia PLC is currently generating about -0.25 per unit of risk. If you would invest  4.95  in Premier African Minerals on October 12, 2024 and sell it today you would lose (1.15) from holding Premier African Minerals or give up 23.23% of portfolio value over 90 days.

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

Premier African Minerals  vs.  XLMedia PLC

Premier African Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier African Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Premier African is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

XLMedia PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XLMedia PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Premier African and XLMedia PLC

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

The idea behind Premier African Minerals and XLMedia PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.