Correlation Between TOPMATERIAL and Pan Entertainment

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

By analyzing existing cross correlation between TOPMATERIAL LTD and Pan Entertainment Co, you can compare the effects of market volatilities on TOPMATERIAL and Pan Entertainment 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 TOPMATERIAL with a short position of Pan Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Pan Entertainment.

Diversification Opportunities for TOPMATERIAL and Pan Entertainment

0.28

Correlation Coefficient

TOPMATERIAL  Pan Entertainment

Modest diversification

The 3 months correlation between TOPMATERIAL and Pan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Pan Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Entertainment and TOPMATERIAL 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 TOPMATERIAL LTD are associated (or correlated) with Pan Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Entertainment has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Pan Entertainment go up and down completely randomly.

Pair Corralation between TOPMATERIAL and Pan Entertainment

Assuming the 90 days trading horizon TOPMATERIAL is expected to generate 1.49 times less return on investment than Pan Entertainment. In addition to that, TOPMATERIAL is 1.13 times more volatile than Pan Entertainment Co. It trades about 0.08 of its total potential returns per unit of risk. Pan Entertainment Co is currently generating about 0.14 per unit of volatility. If you would invest  214,000  in Pan Entertainment Co on December 25, 2024 and sell it today you would earn a total of  77,500  from holding Pan Entertainment Co or generate 36.21% return on investment over 90 days.

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

TOPMATERIAL LTD  vs.  Pan Entertainment Co

TOPMATERIAL LTD

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TOPMATERIAL LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TOPMATERIAL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pan Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Entertainment Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pan Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOPMATERIAL and Pan Entertainment

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

The idea behind TOPMATERIAL LTD and Pan Entertainment Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.