Correlation Between Panda Dairy and CNOOC
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By analyzing existing cross correlation between Panda Dairy Corp and CNOOC Limited, you can compare the effects of market volatilities on Panda Dairy and CNOOC 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 Panda Dairy with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Dairy and CNOOC.
Diversification Opportunities for Panda Dairy and CNOOC
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Panda and CNOOC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Panda Dairy Corp and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and Panda Dairy 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 Panda Dairy Corp are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC Limited has no effect on the direction of Panda Dairy i.e., Panda Dairy and CNOOC go up and down completely randomly.
Pair Corralation between Panda Dairy and CNOOC
Assuming the 90 days trading horizon Panda Dairy is expected to generate 2.55 times less return on investment than CNOOC. In addition to that, Panda Dairy is 1.73 times more volatile than CNOOC Limited. It trades about 0.02 of its total potential returns per unit of risk. CNOOC Limited is currently generating about 0.08 per unit of volatility. If you would invest 1,428 in CNOOC Limited on November 7, 2024 and sell it today you would earn a total of 1,323 from holding CNOOC Limited or generate 92.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Panda Dairy Corp vs. CNOOC Limited
Performance |
| Timeline |
| Panda Dairy Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| CNOOC Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Panda Dairy and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panda Dairy and CNOOC
The main advantage of trading using opposite Panda Dairy and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Dairy position performs unexpectedly, CNOOC 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 CNOOC will offset losses from the drop in CNOOC's long position.The idea behind Panda Dairy Corp and CNOOC Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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