Correlation Between Pan Entertainment and ABOV Semiconductor

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

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

Diversification Opportunities for Pan Entertainment and ABOV Semiconductor

0.55

Correlation Coefficient

Pan Entertainment  ABOV Semiconductor

Very weak diversification

The 3 months correlation between Pan and ABOV is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor and Pan Entertainment 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 Entertainment Co are associated (or correlated) with ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and ABOV Semiconductor go up and down completely randomly.

Pair Corralation between Pan Entertainment and ABOV Semiconductor

Assuming the 90 days trading horizon Pan Entertainment Co is expected to generate 0.66 times more return on investment than ABOV Semiconductor. However, Pan Entertainment Co is 1.52 times less risky than ABOV Semiconductor. It trades about -0.01 of its potential returns per unit of risk. ABOV Semiconductor Co is currently generating about -0.17 per unit of risk. If you would invest  218,500  in Pan Entertainment Co on September 24, 2024 and sell it today you would lose (4,500) from holding Pan Entertainment Co or give up 2.06% of portfolio value over 90 days.

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

Pan Entertainment Co  vs.  ABOV Semiconductor Co

Pan Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pan Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ABOV Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABOV Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pan Entertainment and ABOV Semiconductor

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

The idea behind Pan Entertainment Co and ABOV Semiconductor Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.