Correlation Between Pan Pacific and Target

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

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

Diversification Opportunities for Pan Pacific and Target

0.11

Correlation Coefficient

Pan Pacific  Target

Average diversification

The 3 months correlation between Pan and Target is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pan Pacific International and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Pan Pacific 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 Pan Pacific International are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Pan Pacific i.e., Pan Pacific and Target go up and down completely randomly.

Pair Corralation between Pan Pacific and Target

Assuming the 90 days horizon Pan Pacific International is expected to generate 1.21 times more return on investment than Target. However, Pan Pacific is 1.21 times more volatile than Target. It trades about 0.08 of its potential returns per unit of risk. Target is currently generating about -0.03 per unit of risk. If you would invest  2,536  in Pan Pacific International on November 28, 2024 and sell it today you would earn a total of  202.00  from holding Pan Pacific International or generate 7.97% return on investment over 90 days.

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

Pan Pacific International  vs.  Target

Pan Pacific International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Pacific International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Pan Pacific may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Target is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pan Pacific and Target

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

The idea behind Pan Pacific International and Target 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.