Correlation Between Global Unichip and Panion BF

Can any of the company-specific risk be diversified away by investing in both Global Unichip and Panion BF 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 Global Unichip and Panion BF into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Global Unichip and Panion BF

-0.14

Correlation Coefficient

Global Unichip  Panion BF

Good diversification

The 3 months correlation between Global and Panion is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Panion BF Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panion BF Biotech and Global Unichip 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 Global Unichip Corp are associated (or correlated) with Panion BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panion BF Biotech has no effect on the direction of Global Unichip i.e., Global Unichip and Panion BF go up and down completely randomly.

Pair Corralation between Global Unichip and Panion BF

Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 2.36 times more return on investment than Panion BF. However, Global Unichip is 2.36 times more volatile than Panion BF Biotech. It trades about 0.14 of its potential returns per unit of risk. Panion BF Biotech is currently generating about -0.03 per unit of risk. If you would invest  104,500  in Global Unichip Corp on September 14, 2024 and sell it today you would earn a total of  28,000  from holding Global Unichip Corp or generate 26.79% return on investment over 90 days.

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

Global Unichip Corp  vs.  Panion BF Biotech

Global Unichip Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Unichip Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Global Unichip showed solid returns over the last few months and may actually be approaching a breakup point.

Panion BF Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panion BF Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Panion BF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global Unichip and Panion BF

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

The idea behind Global Unichip Corp and Panion BF Biotech 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.