Correlation Between Pan International and Global Brands

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

Diversification Opportunities for Pan International and Global Brands

-0.6

Correlation Coefficient

Pan International  Global Brands

Excellent diversification

The 3 months correlation between Pan and Global is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pan International Industrial C and Global Brands Manufacture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Brands Manufacture 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 Global Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Brands Manufacture has no effect on the direction of Pan International i.e., Pan International and Global Brands go up and down completely randomly.

Pair Corralation between Pan International and Global Brands

Assuming the 90 days trading horizon Pan International Industrial Corp is expected to generate 1.48 times more return on investment than Global Brands. However, Pan International is 1.48 times more volatile than Global Brands Manufacture. It trades about 0.07 of its potential returns per unit of risk. Global Brands Manufacture is currently generating about -0.14 per unit of risk. If you would invest  3,475  in Pan International Industrial Corp on September 18, 2024 and sell it today you would earn a total of  245.00  from holding Pan International Industrial Corp or generate 7.05% return on investment over 90 days.

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

Pan International Industrial C  vs.  Global Brands Manufacture

Pan International

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan International Industrial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pan International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Brands Manufacture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Brands Manufacture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Pan International and Global Brands

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

The idea behind Pan International Industrial Corp and Global Brands Manufacture 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..