Correlation Between Pan Entertainment and Samji Electronics

Can any of the company-specific risk be diversified away by investing in both Pan Entertainment and Samji 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 Samji 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 Samji Electronics Co, you can compare the effects of market volatilities on Pan Entertainment and Samji 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 Samji Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Entertainment and Samji Electronics.

Diversification Opportunities for Pan Entertainment and Samji Electronics

0.07

Correlation Coefficient

Pan Entertainment  Samji Electronics

Significant diversification

The 3 months correlation between Pan and Samji is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and Samji Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samji 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 Samji Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samji Electronics has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and Samji Electronics go up and down completely randomly.

Pair Corralation between Pan Entertainment and Samji Electronics

Assuming the 90 days trading horizon Pan Entertainment Co is expected to generate 1.89 times more return on investment than Samji Electronics. However, Pan Entertainment is 1.89 times more volatile than Samji Electronics Co. It trades about 0.06 of its potential returns per unit of risk. Samji Electronics Co is currently generating about -0.05 per unit of risk. If you would invest  205,000  in Pan Entertainment Co on September 5, 2024 and sell it today you would earn a total of  9,500  from holding Pan Entertainment Co or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Pan Entertainment Co  vs.  Samji Electronics Co

Pan Entertainment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Entertainment Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Samji Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pan Entertainment and Samji Electronics

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

The idea behind Pan Entertainment Co and Samji 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.