Correlation Between ABB PAR and Nanjing Panda
Can any of the company-specific risk be diversified away by investing in both ABB PAR and Nanjing Panda 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 ABB PAR and Nanjing Panda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABB PAR AB and Nanjing Panda Electronics, you can compare the effects of market volatilities on ABB PAR and Nanjing Panda 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 ABB PAR with a short position of Nanjing Panda. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB PAR and Nanjing Panda.
Diversification Opportunities for ABB PAR and Nanjing Panda
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABB and Nanjing is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ABB PAR AB and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics and ABB PAR 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 ABB PAR AB are associated (or correlated) with Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of ABB PAR i.e., ABB PAR and Nanjing Panda go up and down completely randomly.
Pair Corralation between ABB PAR and Nanjing Panda
Assuming the 90 days horizon ABB PAR is expected to generate 2.35 times less return on investment than Nanjing Panda. But when comparing it to its historical volatility, ABB PAR AB is 3.42 times less risky than Nanjing Panda. It trades about 0.05 of its potential returns per unit of risk. Nanjing Panda Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Nanjing Panda Electronics on October 30, 2024 and sell it today you would earn a total of 2.00 from holding Nanjing Panda Electronics or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
ABB PAR AB vs. Nanjing Panda Electronics
Performance |
| Timeline |
| ABB PAR AB |
| Nanjing Panda Electronics |
ABB PAR and Nanjing Panda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB PAR and Nanjing Panda
The main advantage of trading using opposite ABB PAR and Nanjing Panda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB PAR position performs unexpectedly, Nanjing Panda 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 Nanjing Panda will offset losses from the drop in Nanjing Panda's long position.| ABB PAR vs. ADT Inc | ABB PAR vs. Securitas AB | ABB PAR vs. Superior Plus Corp | ABB PAR vs. Origin Agritech |
| Nanjing Panda vs. Soken Chemical Engineering | Nanjing Panda vs. GRENKELEASING Dusseldorf | Nanjing Panda vs. SILICON LABORATOR | Nanjing Panda vs. Lendlease 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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