Correlation Between Excelsior Medical and Pan International

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

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

Diversification Opportunities for Excelsior Medical and Pan International

-0.72

Correlation Coefficient

Excelsior Medical  Pan International

Pay attention - limited upside

The 3 months correlation between Excelsior and Pan is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co 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 Excelsior Medical 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 Excelsior Medical Co 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 Excelsior Medical i.e., Excelsior Medical and Pan International go up and down completely randomly.

Pair Corralation between Excelsior Medical and Pan International

Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.61 times more return on investment than Pan International. However, Excelsior Medical Co is 1.63 times less risky than Pan International. It trades about 0.04 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about 0.02 per unit of risk. If you would invest  6,970  in Excelsior Medical Co on October 7, 2024 and sell it today you would earn a total of  1,590  from holding Excelsior Medical Co or generate 22.81% return on investment over 90 days.

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

Excelsior Medical Co  vs.  Pan International Industrial C

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pan International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan International Industrial Corp are ranked lower than 7 (%) 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 Excelsior Medical and Pan International

The main advantage of trading using opposite Excelsior Medical and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical 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 Excelsior Medical Co 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.