Correlation Between ITEQ Corp and Pan International

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

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

Diversification Opportunities for ITEQ Corp and Pan International

-0.25

Correlation Coefficient

ITEQ Corp  Pan International

Very good diversification

The 3 months correlation between ITEQ and Pan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ITEQ Corp 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 ITEQ Corp 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 ITEQ Corp 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 ITEQ Corp i.e., ITEQ Corp and Pan International go up and down completely randomly.

Pair Corralation between ITEQ Corp and Pan International

Assuming the 90 days trading horizon ITEQ Corp is expected to under-perform the Pan International. But the stock apears to be less risky and, when comparing its historical volatility, ITEQ Corp is 1.53 times less risky than Pan International. The stock trades about -0.05 of its potential returns per unit of risk. The Pan International Industrial Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,050  in Pan International Industrial Corp on December 23, 2024 and sell it today you would earn a total of  1,110  from holding Pan International Industrial Corp or generate 27.41% return on investment over 90 days.

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

ITEQ Corp  vs.  Pan International Industrial C

ITEQ Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITEQ Corp 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pan International Industrial Corp are ranked lower than 11 (%) 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 ITEQ Corp and Pan International

The main advantage of trading using opposite ITEQ Corp and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITEQ Corp 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 ITEQ Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.