Correlation Between Pan Entertainment and Samwha Electronics

Can any of the company-specific risk be diversified away by investing in both Pan Entertainment and Samwha Electronics 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 Entertainment and Samwha Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pan Entertainment Co and Samwha Electronics Co, you can compare the effects of market volatilities on Pan Entertainment and Samwha Electronics 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 Entertainment with a short position of Samwha Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Entertainment and Samwha Electronics.

Diversification Opportunities for Pan Entertainment and Samwha Electronics

0.39

Correlation Coefficient

Pan Entertainment  Samwha Electronics

Weak diversification

The 3 months correlation between Pan and Samwha is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and Samwha Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samwha Electronics and Pan Entertainment 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 Entertainment Co are associated (or correlated) with Samwha Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samwha Electronics has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and Samwha Electronics go up and down completely randomly.

Pair Corralation between Pan Entertainment and Samwha Electronics

Assuming the 90 days trading horizon Pan Entertainment Co is expected to under-perform the Samwha Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Pan Entertainment Co is 2.71 times less risky than Samwha Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Samwha Electronics Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  296,500  in Samwha Electronics Co on September 12, 2024 and sell it today you would earn a total of  7,500  from holding Samwha Electronics Co or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pan Entertainment Co  vs.  Samwha Electronics Co

Pan Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pan Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samwha Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samwha Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samwha Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pan Entertainment and Samwha Electronics

The main advantage of trading using opposite Pan Entertainment and Samwha Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Entertainment position performs unexpectedly, Samwha Electronics 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 Samwha Electronics will offset losses from the drop in Samwha Electronics' long position.

The idea behind Pan Entertainment Co and Samwha Electronics 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.