Correlation Between Elite Material and Pan International
Can any of the company-specific risk be diversified away by investing in both Elite Material and Pan International 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 Elite Material and Pan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and Pan International Industrial Corp, you can compare the effects of market volatilities on Elite Material and Pan International 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 Elite Material with a short position of Pan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and Pan International.
Diversification Opportunities for Elite Material and Pan International
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elite and Pan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and Pan International Industrial C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan International and Elite Material 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 Elite Material Co are associated (or correlated) with Pan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan International has no effect on the direction of Elite Material i.e., Elite Material and Pan International go up and down completely randomly.
Pair Corralation between Elite Material and Pan International
Assuming the 90 days trading horizon Elite Material Co is expected to generate 1.21 times more return on investment than Pan International. However, Elite Material is 1.21 times more volatile than Pan International Industrial Corp. It trades about 0.33 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about -0.11 per unit of risk. If you would invest 42,700 in Elite Material Co on September 4, 2024 and sell it today you would earn a total of 8,300 from holding Elite Material Co or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. Pan International Industrial C
Performance |
| Timeline |
| Elite Material |
| Pan International |
Elite Material and Pan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and Pan International
The main advantage of trading using opposite Elite Material and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material position performs unexpectedly, Pan International 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 International will offset losses from the drop in Pan International's long position.| Elite Material vs. Compeq Manufacturing Co | Elite Material vs. ITEQ Corp | Elite Material vs. Unimicron Technology Corp | Elite Material vs. Chicony Electronics Co |
| Pan International vs. Taiwan Semiconductor Manufacturing | Pan International vs. Yang Ming Marine | Pan International vs. AU Optronics | Pan International vs. Nan Ya Plastics |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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