Correlation Between Pan International and New Era
Can any of the company-specific risk be diversified away by investing in both Pan International and New Era 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 Pan International and New Era into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan International Industrial Corp and New Era Electronics, you can compare the effects of market volatilities on Pan International and New Era 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 Pan International with a short position of New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan International and New Era.
Diversification Opportunities for Pan International and New Era
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pan and New is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pan International Industrial C and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics and Pan International 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 Pan International Industrial Corp are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of Pan International i.e., Pan International and New Era go up and down completely randomly.
Pair Corralation between Pan International and New Era
Assuming the 90 days trading horizon Pan International is expected to generate 34.33 times less return on investment than New Era. But when comparing it to its historical volatility, Pan International Industrial Corp is 2.28 times less risky than New Era. It trades about 0.01 of its potential returns per unit of risk. New Era Electronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,345 in New Era Electronics on September 4, 2024 and sell it today you would earn a total of 9,855 from holding New Era Electronics or generate 420.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan International Industrial C vs. New Era Electronics
Performance |
| Timeline |
| Pan International |
| New Era Electronics |
Pan International and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan International and New Era
The main advantage of trading using opposite Pan International and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan International position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| Pan International vs. Taiwan Semiconductor Manufacturing | Pan International vs. Yang Ming Marine | Pan International vs. ASE Industrial Holding | Pan International vs. AU Optronics |
| New Era vs. Unimicron Technology Corp | New Era vs. Nan Ya Printed | New Era vs. Elite Material Co | New Era vs. Compeq Manufacturing Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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