Correlation Between Pan International and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both Pan International and BenQ Materials 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 BenQ Materials 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 BenQ Materials Corp, you can compare the effects of market volatilities on Pan International and BenQ Materials 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 BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan International and BenQ Materials.
Diversification Opportunities for Pan International and BenQ Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pan and BenQ is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pan International Industrial C and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp 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 BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Pan International i.e., Pan International and BenQ Materials go up and down completely randomly.
Pair Corralation between Pan International and BenQ Materials
Assuming the 90 days trading horizon Pan International Industrial Corp is expected to generate 1.21 times more return on investment than BenQ Materials. However, Pan International is 1.21 times more volatile than BenQ Materials Corp. It trades about 0.0 of its potential returns per unit of risk. BenQ Materials Corp is currently generating about -0.09 per unit of risk. If you would invest 3,845 in Pan International Industrial Corp on September 14, 2024 and sell it today you would lose (20.00) from holding Pan International Industrial Corp or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan International Industrial C vs. BenQ Materials Corp
Performance |
| Timeline |
| Pan International |
| BenQ Materials Corp |
Pan International and BenQ Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan International and BenQ Materials
The main advantage of trading using opposite Pan International and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan International position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' long position.| Pan International vs. Ching Feng Home | Pan International vs. Excelsior Medical Co | Pan International vs. Standard Foods Corp | Pan International vs. Adata Technology Co |
| BenQ Materials vs. Acbel Polytech | BenQ Materials vs. Gigastorage Corp | BenQ Materials vs. Darfon Electronics Corp | BenQ Materials vs. Walton Advanced Engineering |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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