Correlation Between Premier Foods and Samsung Electronics

Can any of the company-specific risk be diversified away by investing in both Premier Foods and Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co, you can compare the effects of market volatilities on Premier Foods and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Samsung Electronics.

Diversification Opportunities for Premier Foods and Samsung Electronics

-0.26

Correlation Coefficient

Premier Foods  Samsung Electronics

Very good diversification

The 3 months correlation between Premier and Samsung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Premier Foods i.e., Premier Foods and Samsung Electronics go up and down completely randomly.

Pair Corralation between Premier Foods and Samsung Electronics

Assuming the 90 days trading horizon Premier Foods PLC is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Premier Foods PLC is 1.28 times less risky than Samsung Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  79,873  in Samsung Electronics Co on April 20, 2025 and sell it today you would earn a total of  18,127  from holding Samsung Electronics Co or generate 22.69% return on investment over 90 days.

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

Premier Foods PLC  vs.  Samsung Electronics Co

Premier Foods PLC

Risk-Adjusted Performance

Very Weak

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

Samsung Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Samsung Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Foods and Samsung Electronics

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

The idea behind Premier Foods PLC and Samsung Electronics Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.