Correlation Between Pilgrims Pride and Premier Foods

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

By analyzing existing cross correlation between Pilgrims Pride Corp and Premier Foods Plc, you can compare the effects of market volatilities on Pilgrims Pride and Premier Foods 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 Pilgrims Pride with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilgrims Pride and Premier Foods.

Diversification Opportunities for Pilgrims Pride and Premier Foods

0.0

Correlation Coefficient

Pilgrims Pride  Premier Foods

Pay attention - limited upside

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

Pair Corralation between Pilgrims Pride and Premier Foods

If you would invest  4,147  in Pilgrims Pride Corp on September 17, 2024 and sell it today you would earn a total of  1,031  from holding Pilgrims Pride Corp or generate 24.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Pilgrims Pride Corp  vs.  Premier Foods Plc

Pilgrims Pride Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride exhibited solid returns over the last few months and may actually be approaching a breakup point.

Premier Foods Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pilgrims Pride and Premier Foods

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

The idea behind Pilgrims Pride Corp and Premier Foods Plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.