Correlation Between Holy Stone and Pan International

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

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

Diversification Opportunities for Holy Stone and Pan International

0.72

Correlation Coefficient

Holy Stone  Pan International

Poor diversification

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

Pair Corralation between Holy Stone and Pan International

Assuming the 90 days trading horizon Holy Stone is expected to generate 3.58 times less return on investment than Pan International. But when comparing it to its historical volatility, Holy Stone Enterprise is 3.33 times less risky than Pan International. It trades about 0.19 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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

Holy Stone Enterprise  vs.  Pan International Industrial C

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.

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.

Pair Trading with Holy Stone and Pan International

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

The idea behind Holy Stone Enterprise and Pan International Industrial Corp 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.