Correlation Between Pan International and Nan Ya

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

Diversification Opportunities for Pan International and Nan Ya

0.57

Correlation Coefficient

Pan International  Nan Ya

Very weak diversification

The 3 months correlation between Pan and Nan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pan International Industrial C and Nan Ya Printed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Printed 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 Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Printed has no effect on the direction of Pan International i.e., Pan International and Nan Ya go up and down completely randomly.

Pair Corralation between Pan International and Nan Ya

Assuming the 90 days trading horizon Pan International Industrial Corp is expected to generate 0.85 times more return on investment than Nan Ya. However, Pan International Industrial Corp is 1.18 times less risky than Nan Ya. It trades about 0.17 of its potential returns per unit of risk. Nan Ya Printed is currently generating about 0.11 per unit of risk. If you would invest  3,780  in Pan International Industrial Corp on December 5, 2024 and sell it today you would earn a total of  1,000.00  from holding Pan International Industrial Corp or generate 26.46% return on investment over 90 days.

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

Pan International Industrial C  vs.  Nan Ya Printed

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 13 (%) 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.

Nan Ya Printed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Printed are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nan Ya showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan International and Nan Ya

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

The idea behind Pan International Industrial Corp and Nan Ya Printed 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.