Correlation Between China Merchants and Panda Financial
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By analyzing existing cross correlation between China Merchants Bank and Panda Financial Holding, you can compare the effects of market volatilities on China Merchants and Panda Financial 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 China Merchants with a short position of Panda Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Panda Financial.
Diversification Opportunities for China Merchants and Panda Financial
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Panda is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Panda Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panda Financial Holding and China Merchants 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 China Merchants Bank are associated (or correlated) with Panda Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panda Financial Holding has no effect on the direction of China Merchants i.e., China Merchants and Panda Financial go up and down completely randomly.
Pair Corralation between China Merchants and Panda Financial
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.52 times more return on investment than Panda Financial. However, China Merchants Bank is 1.94 times less risky than Panda Financial. It trades about 0.03 of its potential returns per unit of risk. Panda Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 3,532 in China Merchants Bank on November 7, 2024 and sell it today you would earn a total of 533.00 from holding China Merchants Bank or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Panda Financial Holding
Performance |
| Timeline |
| China Merchants Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Panda Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Merchants and Panda Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Panda Financial
The main advantage of trading using opposite China Merchants and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Panda Financial 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 Panda Financial will offset losses from the drop in Panda Financial's long position.The idea behind China Merchants Bank and Panda Financial Holding 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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