Correlation Between Panda Financial and Hengdian Entertainment
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By analyzing existing cross correlation between Panda Financial Holding and Hengdian Entertainment Co, you can compare the effects of market volatilities on Panda Financial and Hengdian Entertainment 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 Hengdian Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Financial and Hengdian Entertainment.
Diversification Opportunities for Panda Financial and Hengdian Entertainment
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Panda and Hengdian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Hengdian Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengdian Entertainment 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 Hengdian Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengdian Entertainment has no effect on the direction of Panda Financial i.e., Panda Financial and Hengdian Entertainment go up and down completely randomly.
Pair Corralation between Panda Financial and Hengdian Entertainment
Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Hengdian Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Panda Financial Holding is 1.16 times less risky than Hengdian Entertainment. The stock trades about -0.35 of its potential returns per unit of risk. The Hengdian Entertainment Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,290 in Hengdian Entertainment Co on November 7, 2024 and sell it today you would earn a total of 185.00 from holding Hengdian Entertainment Co or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Panda Financial Holding vs. Hengdian Entertainment Co
Performance |
| Timeline |
| Panda Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hengdian Entertainment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Panda Financial and Hengdian Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panda Financial and Hengdian Entertainment
The main advantage of trading using opposite Panda Financial and Hengdian Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Financial position performs unexpectedly, Hengdian Entertainment 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 Hengdian Entertainment will offset losses from the drop in Hengdian Entertainment's long position.The idea behind Panda Financial Holding and Hengdian Entertainment Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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