Correlation Between Pan African and Exemplar REITail

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

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

Diversification Opportunities for Pan African and Exemplar REITail

0.0

Correlation Coefficient

Pan African  Exemplar REITail

Pay attention - limited upside

The 3 months correlation between Pan and Exemplar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pan African Resources and Exemplar REITail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar REITail and Pan African 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 African Resources are associated (or correlated) with Exemplar REITail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar REITail has no effect on the direction of Pan African i.e., Pan African and Exemplar REITail go up and down completely randomly.

Pair Corralation between Pan African and Exemplar REITail

If you would invest  69,000  in Pan African Resources on September 11, 2024 and sell it today you would earn a total of  18,500  from holding Pan African Resources or generate 26.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Pan African Resources  vs.  Exemplar REITail

Pan African Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pan African Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pan African exhibited solid returns over the last few months and may actually be approaching a breakup point.

Exemplar REITail

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar REITail are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Exemplar REITail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan African and Exemplar REITail

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

The idea behind Pan African Resources and Exemplar REITail 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.