Correlation Between Premier Foods and Elamex SA

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

Diversification Opportunities for Premier Foods and Elamex SA

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Correlation Coefficient

Premier Foods  Elamex SA

Pay attention - limited upside

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

Pair Corralation between Premier Foods and Elamex SA

Assuming the 90 days horizon Premier Foods Plc is expected to generate 0.73 times more return on investment than Elamex SA. However, Premier Foods Plc is 1.37 times less risky than Elamex SA. It trades about 0.07 of its potential returns per unit of risk. Elamex SA de is currently generating about -0.06 per unit of risk. If you would invest  689.00  in Premier Foods Plc on October 10, 2024 and sell it today you would earn a total of  507.00  from holding Premier Foods Plc or generate 73.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	75.35%
Values	Daily Returns

Premier Foods Plc  vs.  Elamex SA de

Premier Foods Plc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Premier Foods Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Elamex SA de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elamex SA de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Elamex SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Premier Foods and Elamex SA

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

The idea behind Premier Foods Plc and Elamex SA de 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..