Correlation Between Pan Global and Rockridge Resources

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

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

Diversification Opportunities for Pan Global and Rockridge Resources

-0.3

Correlation Coefficient

Pan Global  Rockridge Resources

Very good diversification

The 3 months correlation between Pan and Rockridge is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pan Global Resources and Rockridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockridge Resources and Pan Global 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 Global Resources are associated (or correlated) with Rockridge Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockridge Resources has no effect on the direction of Pan Global i.e., Pan Global and Rockridge Resources go up and down completely randomly.

Pair Corralation between Pan Global and Rockridge Resources

Assuming the 90 days horizon Pan Global Resources is expected to generate 0.44 times more return on investment than Rockridge Resources. However, Pan Global Resources is 2.25 times less risky than Rockridge Resources. It trades about -0.09 of its potential returns per unit of risk. Rockridge Resources is currently generating about -0.04 per unit of risk. If you would invest  8.20  in Pan Global Resources on September 12, 2024 and sell it today you would lose (0.72) from holding Pan Global Resources or give up 8.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Pan Global Resources  vs.  Rockridge Resources

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Rockridge Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rockridge Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Rockridge Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan Global and Rockridge Resources

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

The idea behind Pan Global Resources and Rockridge 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 CEOs Directory module to screen CEOs from public companies around the world.