Correlation Between Pan African and Go Life

Can any of the company-specific risk be diversified away by investing in both Pan African and Go Life 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 Go Life 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 Go Life, you can compare the effects of market volatilities on Pan African and Go Life 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 Go Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan African and Go Life.

Diversification Opportunities for Pan African and Go Life

0.0

Correlation Coefficient

Pan African  Go Life

Pay attention - limited upside

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

Pair Corralation between Pan African and Go Life

If you would invest  68,800  in Pan African Resources on September 4, 2024 and sell it today you would earn a total of  12,200  from holding Pan African Resources or generate 17.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Pan African Resources  vs.  Go Life

Pan African Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan African Resources are ranked lower than 9 (%) 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.

Go Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Go Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Go Life is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pan African and Go Life

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

The idea behind Pan African Resources and Go Life 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.