Correlation Between Pan Entertainment and KPX Green

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

Diversification Opportunities for Pan Entertainment and KPX Green

0.71

Correlation Coefficient

Pan Entertainment  KPX Green

Poor diversification

The 3 months correlation between Pan and KPX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and KPX Green go up and down completely randomly.

Pair Corralation between Pan Entertainment and KPX Green

Assuming the 90 days trading horizon Pan Entertainment Co is expected to generate 0.5 times more return on investment than KPX Green. However, Pan Entertainment Co is 2.01 times less risky than KPX Green. It trades about 0.23 of its potential returns per unit of risk. KPX Green Chemical is currently generating about 0.11 per unit of risk. If you would invest  219,000  in Pan Entertainment Co on October 22, 2024 and sell it today you would earn a total of  20,000  from holding Pan Entertainment Co or generate 9.13% return on investment over 90 days.

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

Pan Entertainment Co  vs.  KPX Green Chemical

Pan Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Entertainment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pan Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

KPX Green Chemical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KPX Green Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KPX Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan Entertainment and KPX Green

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

The idea behind Pan Entertainment Co and KPX Green Chemical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.