Correlation Between Alta Equipment and Pan Global

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

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

Diversification Opportunities for Alta Equipment and Pan Global

-0.78

Correlation Coefficient

Alta Equipment  Pan Global

Pay attention - limited upside

The 3 months correlation between Alta and Pan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Alta Equipment i.e., Alta Equipment and Pan Global go up and down completely randomly.

Pair Corralation between Alta Equipment and Pan Global

Given the investment horizon of 90 days Alta Equipment Group is expected to generate 0.72 times more return on investment than Pan Global. However, Alta Equipment Group is 1.39 times less risky than Pan Global. It trades about 0.01 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.05 per unit of risk. If you would invest  873.00  in Alta Equipment Group on September 7, 2024 and sell it today you would lose (67.00) from holding Alta Equipment Group or give up 7.67% of portfolio value over 90 days.

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

Alta Equipment Group  vs.  Pan Global Resources

Alta Equipment Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Pan Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Global Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alta Equipment and Pan Global

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

The idea behind Alta Equipment Group and Pan Global Resources 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.