Correlation Between Panda Financial and Shandong Rike
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By analyzing existing cross correlation between Panda Financial Holding and Shandong Rike Chemical, you can compare the effects of market volatilities on Panda Financial and Shandong Rike 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 Financial with a short position of Shandong Rike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Financial and Shandong Rike.
Diversification Opportunities for Panda Financial and Shandong Rike
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Panda and Shandong is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Shandong Rike Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Rike Chemical and Panda Financial 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 Financial Holding are associated (or correlated) with Shandong Rike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Rike Chemical has no effect on the direction of Panda Financial i.e., Panda Financial and Shandong Rike go up and down completely randomly.
Pair Corralation between Panda Financial and Shandong Rike
Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Shandong Rike. But the stock apears to be less risky and, when comparing its historical volatility, Panda Financial Holding is 1.01 times less risky than Shandong Rike. The stock trades about -0.36 of its potential returns per unit of risk. The Shandong Rike Chemical is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 645.00 in Shandong Rike Chemical on October 15, 2024 and sell it today you would lose (69.00) from holding Shandong Rike Chemical or give up 10.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Panda Financial Holding vs. Shandong Rike Chemical
Performance |
| Timeline |
| Panda Financial Holding |
| Shandong Rike Chemical |
Panda Financial and Shandong Rike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panda Financial and Shandong Rike
The main advantage of trading using opposite Panda Financial and Shandong Rike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Financial position performs unexpectedly, Shandong Rike 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 Shandong Rike will offset losses from the drop in Shandong Rike's long position.The idea behind Panda Financial Holding and Shandong Rike Chemical 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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