Correlation Between E For and Pan Asia

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

By analyzing existing cross correlation between E for L and Pan Asia Footwear, you can compare the effects of market volatilities on E For and Pan Asia 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 E For with a short position of Pan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and Pan Asia.

Diversification Opportunities for E For and Pan Asia

-0.81

Correlation Coefficient

E For  Pan Asia

Pay attention - limited upside

The 3 months correlation between EFORL and Pan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding E for L and Pan Asia Footwear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Asia Footwear and E For 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 E for L are associated (or correlated) with Pan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Asia Footwear has no effect on the direction of E For i.e., E For and Pan Asia go up and down completely randomly.

Pair Corralation between E For and Pan Asia

Assuming the 90 days trading horizon E for L is expected to generate 1.0 times more return on investment than Pan Asia. However, E For is 1.0 times more volatile than Pan Asia Footwear. It trades about 0.09 of its potential returns per unit of risk. Pan Asia Footwear is currently generating about 0.08 per unit of risk. If you would invest  15.00  in E for L on October 7, 2024 and sell it today you would earn a total of  12.00  from holding E for L or generate 80.0% return on investment over 90 days.

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

E for L  vs.  Pan Asia Footwear

E for L

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E for L are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, E For sustained solid returns over the last few months and may actually be approaching a breakup point.

Pan Asia Footwear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Asia Footwear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with E For and Pan Asia

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

The idea behind E for L and Pan Asia Footwear 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.