Correlation Between Pan Entertainment and Daehan Steel

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

Diversification Opportunities for Pan Entertainment and Daehan Steel

0.34

Correlation Coefficient

Pan Entertainment  Daehan Steel

Weak diversification

The 3 months correlation between Pan and Daehan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and Daehan Steel go up and down completely randomly.

Pair Corralation between Pan Entertainment and Daehan Steel

Assuming the 90 days trading horizon Pan Entertainment is expected to generate 1.77 times less return on investment than Daehan Steel. In addition to that, Pan Entertainment is 1.24 times more volatile than Daehan Steel. It trades about 0.08 of its total potential returns per unit of risk. Daehan Steel is currently generating about 0.18 per unit of volatility. If you would invest  1,351,000  in Daehan Steel on October 24, 2024 and sell it today you would earn a total of  311,000  from holding Daehan Steel or generate 23.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Pan Entertainment Co  vs.  Daehan Steel

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.

Daehan Steel

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Steel are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daehan Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan Entertainment and Daehan Steel

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

The idea behind Pan Entertainment Co and Daehan Steel 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..