Correlation Between LANDSEA GREEN and PACIFIC ONLINE

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

By analyzing existing cross correlation between LANDSEA GREEN MANAGEMENT and PACIFIC ONLINE, you can compare the effects of market volatilities on LANDSEA GREEN and PACIFIC ONLINE 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 LANDSEA GREEN with a short position of PACIFIC ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANDSEA GREEN and PACIFIC ONLINE.

Diversification Opportunities for LANDSEA GREEN and PACIFIC ONLINE

1.0

Correlation Coefficient

LANDSEA GREEN  PACIFIC ONLINE

No risk reduction

The 3 months correlation between LANDSEA and PACIFIC is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding LANDSEA GREEN MANAGEMENT and PACIFIC ONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC ONLINE and LANDSEA GREEN 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 LANDSEA GREEN MANAGEMENT are associated (or correlated) with PACIFIC ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC ONLINE has no effect on the direction of LANDSEA GREEN i.e., LANDSEA GREEN and PACIFIC ONLINE go up and down completely randomly.

Pair Corralation between LANDSEA GREEN and PACIFIC ONLINE

Assuming the 90 days horizon LANDSEA GREEN MANAGEMENT is expected to generate 32.72 times more return on investment than PACIFIC ONLINE. However, LANDSEA GREEN is 32.72 times more volatile than PACIFIC ONLINE. It trades about 0.07 of its potential returns per unit of risk. PACIFIC ONLINE is currently generating about 0.04 per unit of risk. If you would invest  1.35  in LANDSEA GREEN MANAGEMENT on October 4, 2024 and sell it today you would lose (1.25) from holding LANDSEA GREEN MANAGEMENT or give up 92.59% of portfolio value over 90 days.

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

LANDSEA GREEN MANAGEMENT  vs.  PACIFIC ONLINE

LANDSEA GREEN MANAGEMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA GREEN MANAGEMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LANDSEA GREEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC ONLINE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PACIFIC ONLINE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LANDSEA GREEN and PACIFIC ONLINE

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

The idea behind LANDSEA GREEN MANAGEMENT and PACIFIC ONLINE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.