Correlation Between Premium Catering and Terex

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

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

Diversification Opportunities for Premium Catering and Terex

-0.51

Correlation Coefficient

Premium Catering  Terex

Excellent diversification

The 3 months correlation between Premium and Terex is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Premium Catering Limited and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex and Premium Catering 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 Premium Catering Limited are associated (or correlated) with Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Premium Catering i.e., Premium Catering and Terex go up and down completely randomly.

Pair Corralation between Premium Catering and Terex

Allowing for the 90-day total investment horizon Premium Catering Limited is expected to under-perform the Terex. In addition to that, Premium Catering is 2.23 times more volatile than Terex. It trades about 0.0 of its total potential returns per unit of risk. Terex is currently generating about 0.13 per unit of volatility. If you would invest  4,034  in Terex on May 4, 2025 and sell it today you would earn a total of  862.00  from holding Terex or generate 21.37% return on investment over 90 days.

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

Premium Catering Limited  vs.  Terex

Premium Catering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Catering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Premium Catering is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Terex

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terex are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Terex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premium Catering and Terex

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

The idea behind Premium Catering Limited and Terex 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.