Correlation Between Rentokil Initial and Premier Information

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

By analyzing existing cross correlation between Rentokil Initial plc and Premier information Management, you can compare the effects of market volatilities on Rentokil Initial and Premier Information 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 Rentokil Initial with a short position of Premier Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Premier Information.

Diversification Opportunities for Rentokil Initial and Premier Information

0.24

Correlation Coefficient

Rentokil Initial  Premier Information

Modest diversification

The 3 months correlation between Rentokil and Premier is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial plc and Premier information Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier information and Rentokil Initial 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 Rentokil Initial plc are associated (or correlated) with Premier Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier information has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Premier Information go up and down completely randomly.

Pair Corralation between Rentokil Initial and Premier Information

Assuming the 90 days horizon Rentokil Initial plc is expected to under-perform the Premier Information. In addition to that, Rentokil Initial is 1.27 times more volatile than Premier information Management. It trades about -0.1 of its total potential returns per unit of risk. Premier information Management is currently generating about 0.22 per unit of volatility. If you would invest  0.08  in Premier information Management on October 25, 2024 and sell it today you would earn a total of  0.01  from holding Premier information Management or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Rentokil Initial plc  vs.  Premier information Management

Rentokil Initial plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Premier information

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Premier information Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak technical and fundamental indicators, Premier Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rentokil Initial and Premier Information

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

The idea behind Rentokil Initial plc and Premier information Management 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..