Correlation Between Panther Metals and DS Smith

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

By analyzing existing cross correlation between Panther Metals PLC and DS Smith PLC, you can compare the effects of market volatilities on Panther Metals and DS Smith 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 Panther Metals with a short position of DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panther Metals and DS Smith.

Diversification Opportunities for Panther Metals and DS Smith

0.67

Correlation Coefficient

Panther Metals  DS Smith

Poor diversification

The 3 months correlation between Panther and SMDS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith PLC and Panther Metals 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 Panther Metals PLC are associated (or correlated) with DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Panther Metals i.e., Panther Metals and DS Smith go up and down completely randomly.

Pair Corralation between Panther Metals and DS Smith

Assuming the 90 days trading horizon Panther Metals PLC is expected to under-perform the DS Smith. In addition to that, Panther Metals is 4.18 times more volatile than DS Smith PLC. It trades about -0.06 of its total potential returns per unit of risk. DS Smith PLC is currently generating about -0.04 per unit of volatility. If you would invest  54,713  in DS Smith PLC on October 10, 2024 and sell it today you would lose (413.00) from holding DS Smith PLC or give up 0.75% of portfolio value over 90 days.

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

Panther Metals PLC  vs.  DS Smith PLC

Panther Metals PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panther Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

DS Smith PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DS Smith PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DS Smith unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panther Metals and DS Smith

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

The idea behind Panther Metals PLC and DS Smith PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.