Correlation Between Premier Technology and Teka Construction

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

By analyzing existing cross correlation between Premier Technology Public and Teka Construction PCL, you can compare the effects of market volatilities on Premier Technology and Teka Construction 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 Technology with a short position of Teka Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Technology and Teka Construction.

Diversification Opportunities for Premier Technology and Teka Construction

-0.04

Correlation Coefficient

Premier Technology  Teka Construction

Good diversification

The 3 months correlation between Premier and Teka is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Premier Technology Public and Teka Construction PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teka Construction PCL and Premier Technology 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 Technology Public are associated (or correlated) with Teka Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teka Construction PCL has no effect on the direction of Premier Technology i.e., Premier Technology and Teka Construction go up and down completely randomly.

Pair Corralation between Premier Technology and Teka Construction

Assuming the 90 days horizon Premier Technology Public is expected to generate 0.51 times more return on investment than Teka Construction. However, Premier Technology Public is 1.96 times less risky than Teka Construction. It trades about 0.09 of its potential returns per unit of risk. Teka Construction PCL is currently generating about -0.06 per unit of risk. If you would invest  895.00  in Premier Technology Public on September 5, 2024 and sell it today you would earn a total of  45.00  from holding Premier Technology Public or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Premier Technology Public  vs.  Teka Construction PCL

Premier Technology Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Technology Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Premier Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Teka Construction PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teka Construction PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Premier Technology and Teka Construction

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

The idea behind Premier Technology Public and Teka Construction PCL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.