Correlation Between Samfine Creation and Premium Catering

Can any of the company-specific risk be diversified away by investing in both Samfine Creation and Premium Catering 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 Samfine Creation and Premium Catering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samfine Creation Holdings and Premium Catering Limited, you can compare the effects of market volatilities on Samfine Creation and Premium Catering 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 Samfine Creation with a short position of Premium Catering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samfine Creation and Premium Catering.

Diversification Opportunities for Samfine Creation and Premium Catering

0.32

Correlation Coefficient

Samfine Creation  Premium Catering

Weak diversification

The 3 months correlation between Samfine and Premium is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Samfine Creation Holdings and Premium Catering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Catering and Samfine Creation 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 Samfine Creation Holdings are associated (or correlated) with Premium Catering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Catering has no effect on the direction of Samfine Creation i.e., Samfine Creation and Premium Catering go up and down completely randomly.

Pair Corralation between Samfine Creation and Premium Catering

Given the investment horizon of 90 days Samfine Creation Holdings is expected to under-perform the Premium Catering. In addition to that, Samfine Creation is 2.88 times more volatile than Premium Catering Limited. It trades about -0.08 of its total potential returns per unit of risk. Premium Catering Limited is currently generating about 0.04 per unit of volatility. If you would invest  81.00  in Premium Catering Limited on November 28, 2024 and sell it today you would earn a total of  3.00  from holding Premium Catering Limited or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samfine Creation Holdings  vs.  Premium Catering Limited

Samfine Creation Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Premium Catering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Catering Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Premium Catering exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samfine Creation and Premium Catering

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

The idea behind Samfine Creation Holdings and Premium Catering Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.