Correlation Between Pan Asia and EX PACK

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Can any of the company-specific risk be diversified away by investing in both Pan Asia and EX PACK 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 Asia and EX PACK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Asia Banking and EX PACK RUGATED CARTONS, you can compare the effects of market volatilities on Pan Asia and EX PACK 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 Asia with a short position of EX PACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Asia and EX PACK.

Diversification Opportunities for Pan Asia and EX PACK

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Pan and PACKN0000 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Banking and EX PACK RUGATED CARTONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EX PACK RUGATED and Pan Asia 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 Asia Banking are associated (or correlated) with EX PACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EX PACK RUGATED has no effect on the direction of Pan Asia i.e., Pan Asia and EX PACK go up and down completely randomly.

Pair Corralation between Pan Asia and EX PACK

Assuming the 90 days trading horizon Pan Asia Banking is expected to under-perform the EX PACK. In addition to that, Pan Asia is 1.38 times more volatile than EX PACK RUGATED CARTONS. It trades about -0.15 of its total potential returns per unit of risk. EX PACK RUGATED CARTONS is currently generating about -0.07 per unit of volatility. If you would invest  1,520  in EX PACK RUGATED CARTONS on November 28, 2024 and sell it today you would lose (40.00) from holding EX PACK RUGATED CARTONS or give up 2.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Pan Asia Banking  vs.  EX PACK RUGATED CARTONS

 Performance 
       Timeline  
Pan Asia Banking 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pan Asia Banking are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pan Asia sustained solid returns over the last few months and may actually be approaching a breakup point.
EX PACK RUGATED 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in EX PACK RUGATED CARTONS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EX PACK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pan Asia and EX PACK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pan Asia and EX PACK

The main advantage of trading using opposite Pan Asia and EX PACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Asia position performs unexpectedly, EX PACK 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 EX PACK will offset losses from the drop in EX PACK's long position.
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The idea behind Pan Asia Banking and EX PACK RUGATED CARTONS 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.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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