Correlation Between Premier Foods and China Feihe
Can any of the company-specific risk be diversified away by investing in both Premier Foods and China Feihe 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 Foods and China Feihe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and China Feihe Limited, you can compare the effects of market volatilities on Premier Foods and China Feihe 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 Foods with a short position of China Feihe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and China Feihe.
Diversification Opportunities for Premier Foods and China Feihe
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premier and China is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and China Feihe Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Feihe Limited and Premier Foods 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 Foods Plc are associated (or correlated) with China Feihe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Feihe Limited has no effect on the direction of Premier Foods i.e., Premier Foods and China Feihe go up and down completely randomly.
Pair Corralation between Premier Foods and China Feihe
If you would invest 1,226 in Premier Foods Plc on September 6, 2024 and sell it today you would earn a total of 0.00 from holding Premier Foods Plc or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Premier Foods Plc vs. China Feihe Limited
Performance |
Timeline |
Premier Foods Plc |
China Feihe Limited |
Premier Foods and China Feihe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Premier Foods and China Feihe
The main advantage of trading using opposite Premier Foods and China Feihe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, China Feihe 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 China Feihe will offset losses from the drop in China Feihe's long position.Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. Naturally Splendid Enterprises | Premier Foods vs. Aryzta AG PK | Premier Foods vs. The A2 Milk |
China Feihe vs. WH Group Limited | China Feihe vs. BG Foods | China Feihe vs. JBS SA | China Feihe vs. Marfrig Global Foods |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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