Correlation Between National Plastic and Pan Entertainment
Can any of the company-specific risk be diversified away by investing in both National Plastic and Pan Entertainment 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 National Plastic and Pan Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and Pan Entertainment Co, you can compare the effects of market volatilities on National Plastic and Pan Entertainment 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 National Plastic with a short position of Pan Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Pan Entertainment.
Diversification Opportunities for National Plastic and Pan Entertainment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Pan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Pan Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Entertainment and National Plastic 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 National Plastic Co are associated (or correlated) with Pan Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Entertainment has no effect on the direction of National Plastic i.e., National Plastic and Pan Entertainment go up and down completely randomly.
Pair Corralation between National Plastic and Pan Entertainment
Assuming the 90 days trading horizon National Plastic is expected to generate 2.91 times less return on investment than Pan Entertainment. But when comparing it to its historical volatility, National Plastic Co is 2.1 times less risky than Pan Entertainment. It trades about 0.12 of its potential returns per unit of risk. Pan Entertainment Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 213,000 in Pan Entertainment Co on October 12, 2024 and sell it today you would earn a total of 13,500 from holding Pan Entertainment Co or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. Pan Entertainment Co
Performance |
| Timeline |
| National Plastic |
| Pan Entertainment |
National Plastic and Pan Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and Pan Entertainment
The main advantage of trading using opposite National Plastic and Pan Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Pan Entertainment 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 Pan Entertainment will offset losses from the drop in Pan Entertainment's long position.| National Plastic vs. Hanjoo Light Metal | National Plastic vs. Iljin Display | National Plastic vs. Jeju Air Co | National Plastic vs. Duksan Hi Metal |
| Pan Entertainment vs. National Plastic Co | Pan Entertainment vs. Ssangyong Materials Corp | Pan Entertainment vs. RF Materials Co | Pan Entertainment vs. Hyosung Advanced Materials |
Check out your portfolio center.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.
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