Correlation Between Global Brands and Pan International
Can any of the company-specific risk be diversified away by investing in both Global Brands 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 Global Brands and Pan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Brands Manufacture and Pan International Industrial Corp, you can compare the effects of market volatilities on Global Brands 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 Global Brands with a short position of Pan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Brands and Pan International.
Diversification Opportunities for Global Brands and Pan International
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Pan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Brands Manufacture 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 Global Brands 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 Global Brands Manufacture 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 Global Brands i.e., Global Brands and Pan International go up and down completely randomly.
Pair Corralation between Global Brands and Pan International
Assuming the 90 days trading horizon Global Brands Manufacture is expected to generate 0.6 times more return on investment than Pan International. However, Global Brands Manufacture is 1.66 times less risky than Pan International. It trades about -0.17 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about -0.17 per unit of risk. If you would invest 5,680 in Global Brands Manufacture on September 12, 2024 and sell it today you would lose (270.00) from holding Global Brands Manufacture or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Brands Manufacture vs. Pan International Industrial C
Performance |
| Timeline |
| Global Brands Manufacture |
| Pan International |
Global Brands and Pan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Brands and Pan International
The main advantage of trading using opposite Global Brands and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Brands 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.| Global Brands vs. HannStar Board Corp | Global Brands vs. ITEQ Corp | Global Brands vs. Unitech Printed Circuit | Global Brands vs. Career Technology MFG |
| Pan International vs. Hunya Foods Co | Pan International vs. Hi Lai Foods Co | Pan International vs. Sunspring Metal Corp | Pan International vs. Lian Hwa Foods |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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