Correlation Between Pan Pacific and Target
Can any of the company-specific risk be diversified away by investing in both Pan Pacific and Target 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 Pacific and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Pacific International and Target, you can compare the effects of market volatilities on Pan Pacific and Target 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 Pacific with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Pacific and Target.
Diversification Opportunities for Pan Pacific and Target
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pan and Target is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pan Pacific International and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Pan Pacific 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 Pacific International are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Pan Pacific i.e., Pan Pacific and Target go up and down completely randomly.
Pair Corralation between Pan Pacific and Target
Assuming the 90 days horizon Pan Pacific International is expected to generate 0.37 times more return on investment than Target. However, Pan Pacific International is 2.72 times less risky than Target. It trades about 0.11 of its potential returns per unit of risk. Target is currently generating about -0.05 per unit of risk. If you would invest 2,240 in Pan Pacific International on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Pan Pacific International or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan Pacific International vs. Target
Performance |
| Timeline |
| Pan Pacific International |
| Target |
Pan Pacific and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan Pacific and Target
The main advantage of trading using opposite Pan Pacific and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Pacific position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Pan Pacific vs. KINGBOARD CHEMICAL | Pan Pacific vs. X FAB Silicon Foundries | Pan Pacific vs. TIANDE CHEMICAL | Pan Pacific vs. SEKISUI CHEMICAL |
| Target vs. TOREX SEMICONDUCTOR LTD | Target vs. MagnaChip Semiconductor Corp | Target vs. Magnachip Semiconductor | Target vs. DELTA AIR LINES |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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