Correlation Between BA Airport and Premier Technology

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

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

Diversification Opportunities for BA Airport and Premier Technology

-0.04

Correlation Coefficient

BA Airport  Premier Technology

Good diversification

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

Pair Corralation between BA Airport and Premier Technology

Assuming the 90 days trading horizon BA Airport is expected to generate 1.47 times less return on investment than Premier Technology. But when comparing it to its historical volatility, BA Airport Leasehold is 1.88 times less risky than Premier Technology. It trades about 0.07 of its potential returns per unit of risk. Premier Technology Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,160  in Premier Technology Public on April 22, 2025 and sell it today you would earn a total of  50.00  from holding Premier Technology Public or generate 4.31% return on investment over 90 days.

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

BA Airport Leasehold  vs.  Premier Technology Public

BA Airport Leasehold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Premier Technology Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Technology Public are ranked lower than 4 (%) 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.

Pair Trading with BA Airport and Premier Technology

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

The idea behind BA Airport Leasehold and Premier Technology Public 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.