Correlation Between Premium Brands and S A P

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

By analyzing existing cross correlation between Premium Brands Holdings and Saputo Inc, you can compare the effects of market volatilities on Premium Brands and S A P 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 Brands with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Brands and S A P.

Diversification Opportunities for Premium Brands and S A P

0.64

Correlation Coefficient

Premium Brands  S A P

Poor diversification

The 3 months correlation between Premium and SAP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc and Premium Brands 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 Brands Holdings are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of Premium Brands i.e., Premium Brands and S A P go up and down completely randomly.

Pair Corralation between Premium Brands and S A P

Assuming the 90 days trading horizon Premium Brands Holdings is expected to generate 1.43 times more return on investment than S A P. However, Premium Brands is 1.43 times more volatile than Saputo Inc. It trades about 0.15 of its potential returns per unit of risk. Saputo Inc is currently generating about 0.11 per unit of risk. If you would invest  7,648  in Premium Brands Holdings on April 22, 2025 and sell it today you would earn a total of  1,403  from holding Premium Brands Holdings or generate 18.34% return on investment over 90 days.

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

Premium Brands Holdings  vs.  Saputo Inc

Premium Brands Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Brands Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical indicators, Premium Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Saputo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saputo Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Premium Brands and S A P

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

The idea behind Premium Brands Holdings and Saputo Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.