Correlation Between BBC and Pan Entertainment
Can any of the company-specific risk be diversified away by investing in both BBC 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 BBC and Pan Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBC Co and Pan Entertainment Co, you can compare the effects of market volatilities on BBC 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 BBC with a short position of Pan Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBC and Pan Entertainment.
Diversification Opportunities for BBC and Pan Entertainment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BBC and Pan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BBC 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 BBC 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 BBC 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 BBC i.e., BBC and Pan Entertainment go up and down completely randomly.
Pair Corralation between BBC and Pan Entertainment
Assuming the 90 days trading horizon BBC Co is expected to generate 0.83 times more return on investment than Pan Entertainment. However, BBC Co is 1.21 times less risky than Pan Entertainment. It trades about 0.0 of its potential returns per unit of risk. Pan Entertainment Co is currently generating about -0.05 per unit of risk. If you would invest 880,435 in BBC Co on September 3, 2024 and sell it today you would lose (92,435) from holding BBC Co or give up 10.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBC Co vs. Pan Entertainment Co
Performance |
| Timeline |
| BBC Co |
| Pan Entertainment |
BBC and Pan Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBC and Pan Entertainment
The main advantage of trading using opposite BBC and Pan Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBC 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.The idea behind BBC Co and Pan Entertainment Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pan Entertainment vs. Korea New Network | Pan Entertainment vs. ICD Co | Pan Entertainment vs. DYPNF CoLtd | Pan Entertainment vs. Busan Industrial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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