Correlation Between Pan Asia and Ocean Glass

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

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

Diversification Opportunities for Pan Asia and Ocean Glass

0.81

Correlation Coefficient

Pan Asia  Ocean Glass

Very poor diversification

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

Pair Corralation between Pan Asia and Ocean Glass

Assuming the 90 days trading horizon Pan Asia is expected to generate 1.02 times less return on investment than Ocean Glass. But when comparing it to its historical volatility, Pan Asia Footwear is 1.0 times less risky than Ocean Glass. It trades about 0.06 of its potential returns per unit of risk. Ocean Glass Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,381  in Ocean Glass Public on October 8, 2024 and sell it today you would lose (531.00) from holding Ocean Glass Public or give up 22.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.58%
Values	Daily Returns

Pan Asia Footwear  vs.  Ocean Glass Public

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.

Ocean Glass Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Glass Public 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 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 Pan Asia and Ocean Glass

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

The idea behind Pan Asia Footwear and Ocean Glass Public 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 Stocks Directory module to find actively traded stocks across global markets.