Correlation Between Ace Global and Pan Global

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

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

Diversification Opportunities for Ace Global and Pan Global

-0.03

Correlation Coefficient

Ace Global  Pan Global

Good diversification

The 3 months correlation between Ace and Pan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ace Global Business and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources and Ace 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 Ace Global Business are associated (or correlated) with Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Ace Global i.e., Ace Global and Pan Global go up and down completely randomly.

Pair Corralation between Ace Global and Pan Global

Given the investment horizon of 90 days Ace Global Business is expected to generate 0.05 times more return on investment than Pan Global. However, Ace Global Business is 20.43 times less risky than Pan Global. It trades about 0.1 of its potential returns per unit of risk. Pan Global Resources is currently generating about 0.0 per unit of risk. If you would invest  1,031  in Ace Global Business on March 17, 2024 and sell it today you would earn a total of  172.00  from holding Ace Global Business or generate 16.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.46%
Values	Daily Returns

Ace Global Business  vs.  Pan Global Resources

Ace Global Business

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pan Global Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Global Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Pan Global may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Ace Global and Pan Global

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

The idea behind Ace Global Business and Pan Global 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.