Correlation Between Pan Entertainment and NAU IB

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

Diversification Opportunities for Pan Entertainment and NAU IB

0.56

Correlation Coefficient

Pan Entertainment  NAU IB

Very weak diversification

The 3 months correlation between Pan and NAU is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and NAU IB Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAU IB Capital 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 NAU IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAU IB Capital has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and NAU IB go up and down completely randomly.

Pair Corralation between Pan Entertainment and NAU IB

Assuming the 90 days trading horizon Pan Entertainment is expected to generate 2.64 times less return on investment than NAU IB. But when comparing it to its historical volatility, Pan Entertainment Co is 2.74 times less risky than NAU IB. It trades about 0.08 of its potential returns per unit of risk. NAU IB Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  92,945  in NAU IB Capital on October 25, 2024 and sell it today you would earn a total of  21,455  from holding NAU IB Capital or generate 23.08% return on investment over 90 days.

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

Pan Entertainment Co  vs.  NAU IB Capital

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.

NAU IB Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NAU IB Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAU IB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan Entertainment and NAU IB

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

The idea behind Pan Entertainment Co and NAU IB Capital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.