Correlation Between Pan International and Holy Stone

Can any of the company-specific risk be diversified away by investing in both Pan International and Holy Stone 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 International and Holy Stone into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pan International Industrial Corp and Holy Stone Enterprise, you can compare the effects of market volatilities on Pan International and Holy Stone 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 International with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan International and Holy Stone.

Diversification Opportunities for Pan International and Holy Stone

0.72

Correlation Coefficient

Pan International  Holy Stone

Poor diversification

The 3 months correlation between Pan and Holy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pan International Industrial C and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise and Pan International 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 International Industrial Corp are associated (or correlated) with Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Pan International i.e., Pan International and Holy Stone go up and down completely randomly.

Pair Corralation between Pan International and Holy Stone

Assuming the 90 days trading horizon Pan International Industrial Corp is expected to generate 3.33 times more return on investment than Holy Stone. However, Pan International is 3.33 times more volatile than Holy Stone Enterprise. It trades about 0.2 of its potential returns per unit of risk. Holy Stone Enterprise is currently generating about 0.19 per unit of risk. If you would invest  3,925  in Pan International Industrial Corp on December 20, 2024 and sell it today you would earn a total of  1,445  from holding Pan International Industrial Corp or generate 36.82% return on investment over 90 days.

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

Pan International Industrial C  vs.  Holy Stone Enterprise

Pan International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pan International Industrial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pan International showed solid returns over the last few months and may actually be approaching a breakup point.

Holy Stone Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holy Stone Enterprise are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Holy Stone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pan International and Holy Stone

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

The idea behind Pan International Industrial Corp and Holy Stone Enterprise 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.