Correlation Between XLMedia PLC and Premier African

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

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

Diversification Opportunities for XLMedia PLC and Premier African

-0.22

Correlation Coefficient

XLMedia PLC  Premier African

Very good diversification

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

Pair Corralation between XLMedia PLC and Premier African

Assuming the 90 days trading horizon XLMedia PLC is expected to under-perform the Premier African. In addition to that, XLMedia PLC is 1.12 times more volatile than Premier African Minerals. It trades about -0.25 of its total potential returns per unit of risk. Premier African Minerals is currently generating about -0.26 per unit of volatility. 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

XLMedia PLC  vs.  Premier African Minerals

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.

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.

Pair Trading with XLMedia PLC and Premier African

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

The idea behind XLMedia PLC and Premier African Minerals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.