Correlation Between Premier Foods and FDCTech

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

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

Diversification Opportunities for Premier Foods and FDCTech

0.5

Correlation Coefficient

Premier Foods  FDCTech

Very weak diversification

The 3 months correlation between Premier and FDCTech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods plc and FDCTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDCTech and Premier Foods 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 Foods plc are associated (or correlated) with FDCTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDCTech has no effect on the direction of Premier Foods i.e., Premier Foods and FDCTech go up and down completely randomly.

Pair Corralation between Premier Foods and FDCTech

Assuming the 90 days horizon Premier Foods is expected to generate 15.83 times less return on investment than FDCTech. But when comparing it to its historical volatility, Premier Foods plc is 9.8 times less risky than FDCTech. It trades about 0.13 of its potential returns per unit of risk. FDCTech is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2.17  in FDCTech on May 4, 2025 and sell it today you would earn a total of  6.23  from holding FDCTech or generate 287.1% return on investment over 90 days.

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

Premier Foods plc  vs.  FDCTech

Premier Foods plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Foods plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Premier Foods may actually be approaching a critical reversion point that can send shares even higher in September 2025.

FDCTech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FDCTech are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, FDCTech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Foods and FDCTech

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

The idea behind Premier Foods plc and FDCTech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.