Correlation Between Global Brands and Pan International

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

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

Diversification Opportunities for Global Brands and Pan International

-0.61

Correlation Coefficient

Global Brands  Pan International

Excellent diversification

The 3 months correlation between Global and Pan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Brands Manufacture 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 Global Brands 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 Brands Manufacture 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 Global Brands i.e., Global Brands and Pan International go up and down completely randomly.

Pair Corralation between Global Brands and Pan International

Assuming the 90 days trading horizon Global Brands Manufacture is expected to under-perform the Pan International. But the stock apears to be less risky and, when comparing its historical volatility, Global Brands Manufacture is 1.89 times less risky than Pan International. The stock trades about -0.26 of its potential returns per unit of risk. The Pan International Industrial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,755  in Pan International Industrial Corp on September 17, 2024 and sell it today you would earn a total of  110.00  from holding Pan International Industrial Corp or generate 2.93% return on investment over 90 days.

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

Global Brands Manufacture  vs.  Pan International Industrial C

Global Brands Manufacture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Brands Manufacture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture 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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Brands and Pan International

The main advantage of trading using opposite Global Brands and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Brands 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 Global Brands Manufacture 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.