Correlation Between Panda Financial and Fangda Special

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Can any of the company-specific risk be diversified away by investing in both Panda Financial and Fangda Special 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 Panda Financial and Fangda Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panda Financial Holding and Fangda Special Steel, you can compare the effects of market volatilities on Panda Financial and Fangda Special 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 Fangda Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Financial and Fangda Special.

Diversification Opportunities for Panda Financial and Fangda Special

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Panda and Fangda is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Fangda Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fangda Special Steel 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 Fangda Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fangda Special Steel has no effect on the direction of Panda Financial i.e., Panda Financial and Fangda Special go up and down completely randomly.

Pair Corralation between Panda Financial and Fangda Special

Assuming the 90 days trading horizon Panda Financial Holding is expected to generate 1.88 times more return on investment than Fangda Special. However, Panda Financial is 1.88 times more volatile than Fangda Special Steel. It trades about 0.0 of its potential returns per unit of risk. Fangda Special Steel is currently generating about -0.04 per unit of risk. If you would invest  1,384  in Panda Financial Holding on October 29, 2024 and sell it today you would lose (254.00) from holding Panda Financial Holding or give up 18.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Panda Financial Holding  vs.  Fangda Special Steel

 Performance 
       Timeline  
Panda Financial Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Panda Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Fangda Special Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fangda Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fangda Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Panda Financial and Fangda Special Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Panda Financial and Fangda Special

The main advantage of trading using opposite Panda Financial and Fangda Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Financial position performs unexpectedly, Fangda Special 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 Fangda Special will offset losses from the drop in Fangda Special's long position.
The idea behind Panda Financial Holding and Fangda Special Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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