Correlation Between China State and Panda Dairy
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By analyzing existing cross correlation between China State Construction and Panda Dairy Corp, you can compare the effects of market volatilities on China State and Panda Dairy 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 State with a short position of Panda Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Panda Dairy.
Diversification Opportunities for China State and Panda Dairy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Panda is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Panda Dairy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panda Dairy Corp and China State 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 State Construction are associated (or correlated) with Panda Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panda Dairy Corp has no effect on the direction of China State i.e., China State and Panda Dairy go up and down completely randomly.
Pair Corralation between China State and Panda Dairy
Assuming the 90 days trading horizon China State is expected to generate 2.41 times less return on investment than Panda Dairy. But when comparing it to its historical volatility, China State Construction is 1.4 times less risky than Panda Dairy. It trades about 0.02 of its potential returns per unit of risk. Panda Dairy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,905 in Panda Dairy Corp on August 25, 2024 and sell it today you would earn a total of 193.00 from holding Panda Dairy Corp or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Panda Dairy Corp
Performance |
| Timeline |
| China State Construction |
| Panda Dairy Corp |
China State and Panda Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Panda Dairy
The main advantage of trading using opposite China State and Panda Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Panda Dairy 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 Dairy will offset losses from the drop in Panda Dairy's long position.| China State vs. Tongxing Environmental Protection | China State vs. Youyou Foods Co | China State vs. Shantou Wanshun Package | China State vs. Suzhou Weizhixiang Food |
| Panda Dairy vs. China Petroleum Chemical | Panda Dairy vs. PetroChina Co Ltd | Panda Dairy vs. China State Construction | Panda Dairy vs. China Railway Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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