Correlation Between Samart Digital and Pan Asia

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

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

Diversification Opportunities for Samart Digital and Pan Asia

-0.24

Correlation Coefficient

Samart Digital  Pan Asia

Very good diversification

The 3 months correlation between Samart and Pan is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samart Digital Public 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 Samart Digital 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 Samart Digital Public 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 Samart Digital i.e., Samart Digital and Pan Asia go up and down completely randomly.

Pair Corralation between Samart Digital and Pan Asia

Assuming the 90 days trading horizon Samart Digital Public is not expected to generate positive returns. Moreover, Samart Digital is 5.64 times more volatile than Pan Asia Footwear. It trades away all of its potential returns to assume current level of volatility. Pan Asia Footwear is currently generating about 0.11 per unit of risk. If you would invest  92.00  in Pan Asia Footwear on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Pan Asia Footwear or generate 5.43% return on investment over 90 days.

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

Samart Digital Public  vs.  Pan Asia Footwear

Samart Digital Public

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed 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 latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Samart Digital and Pan Asia

The main advantage of trading using opposite Samart Digital and Pan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samart Digital 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 Samart Digital Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.