Correlation Between Pan Jit and Advanced Power
Can any of the company-specific risk be diversified away by investing in both Pan Jit and Advanced Power 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 Jit and Advanced Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Jit International and Advanced Power Electronics, you can compare the effects of market volatilities on Pan Jit and Advanced Power 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 Jit with a short position of Advanced Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Jit and Advanced Power.
Diversification Opportunities for Pan Jit and Advanced Power
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pan and Advanced is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pan Jit International and Advanced Power Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Power Elect and Pan Jit 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 Jit International are associated (or correlated) with Advanced Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Power Elect has no effect on the direction of Pan Jit i.e., Pan Jit and Advanced Power go up and down completely randomly.
Pair Corralation between Pan Jit and Advanced Power
Assuming the 90 days trading horizon Pan Jit is expected to generate 5.48 times less return on investment than Advanced Power. But when comparing it to its historical volatility, Pan Jit International is 1.17 times less risky than Advanced Power. It trades about 0.02 of its potential returns per unit of risk. Advanced Power Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,900 in Advanced Power Electronics on November 28, 2024 and sell it today you would earn a total of 1,450 from holding Advanced Power Electronics or generate 18.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan Jit International vs. Advanced Power Electronics
Performance |
| Timeline |
| Pan Jit International |
| Advanced Power Elect |
Pan Jit and Advanced Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan Jit and Advanced Power
The main advantage of trading using opposite Pan Jit and Advanced Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Jit position performs unexpectedly, Advanced Power 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 Advanced Power will offset losses from the drop in Advanced Power's long position.| Pan Jit vs. Elan Microelectronics Corp | Pan Jit vs. Walsin Technology Corp | Pan Jit vs. Unimicron Technology Corp | Pan Jit vs. Visual Photonics Epitaxy |
| Advanced Power vs. Pan Jit International | Advanced Power vs. Global Mixed Mode Technology | Advanced Power vs. Sitronix Technology Corp | Advanced Power vs. Nuvoton Technology Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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