Correlation Between Panasonic Corp and Gfinity PLC

Can any of the company-specific risk be diversified away by investing in both Panasonic Corp and Gfinity PLC 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 Panasonic Corp and Gfinity PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Panasonic Corp and Gfinity PLC, you can compare the effects of market volatilities on Panasonic Corp and Gfinity PLC 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 Panasonic Corp with a short position of Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panasonic Corp and Gfinity PLC.

Diversification Opportunities for Panasonic Corp and Gfinity PLC

0.81

Correlation Coefficient

Panasonic Corp  Gfinity PLC

Very poor diversification

The 3 months correlation between Panasonic and Gfinity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Panasonic Corp and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC and Panasonic Corp 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 Panasonic Corp are associated (or correlated) with Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Panasonic Corp i.e., Panasonic Corp and Gfinity PLC go up and down completely randomly.

Pair Corralation between Panasonic Corp and Gfinity PLC

Assuming the 90 days trading horizon Panasonic Corp is expected to generate 0.23 times more return on investment than Gfinity PLC. However, Panasonic Corp is 4.36 times less risky than Gfinity PLC. It trades about 0.06 of its potential returns per unit of risk. Gfinity PLC is currently generating about -0.01 per unit of risk. If you would invest  103,049  in Panasonic Corp on September 26, 2024 and sell it today you would earn a total of  58,851  from holding Panasonic Corp or generate 57.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.8%
Values	Daily Returns

Panasonic Corp  vs.  Gfinity PLC

Panasonic Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panasonic Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Panasonic Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gfinity PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panasonic Corp and Gfinity PLC

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

The idea behind Panasonic Corp and Gfinity PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.