Correlation Between Nanjing Panda and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Nanjing Panda and Alliance Data 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 Nanjing Panda and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanjing Panda Electronics and Alliance Data Systems, you can compare the effects of market volatilities on Nanjing Panda and Alliance Data 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 Nanjing Panda with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Panda and Alliance Data.
Diversification Opportunities for Nanjing Panda and Alliance Data
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nanjing and Alliance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Nanjing Panda 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 Nanjing Panda Electronics are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Alliance Data go up and down completely randomly.
Pair Corralation between Nanjing Panda and Alliance Data
Assuming the 90 days horizon Nanjing Panda is expected to generate 1.18 times less return on investment than Alliance Data. In addition to that, Nanjing Panda is 1.99 times more volatile than Alliance Data Systems. It trades about 0.05 of its total potential returns per unit of risk. Alliance Data Systems is currently generating about 0.11 per unit of volatility. If you would invest 3,094 in Alliance Data Systems on November 3, 2024 and sell it today you would earn a total of 2,952 from holding Alliance Data Systems or generate 95.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nanjing Panda Electronics vs. Alliance Data Systems
Performance |
| Timeline |
| Nanjing Panda Electronics |
| Alliance Data Systems |
Nanjing Panda and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Panda and Alliance Data
The main advantage of trading using opposite Nanjing Panda and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Panda position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Nanjing Panda vs. Amphenol | Nanjing Panda vs. Hon Hai Precision | Nanjing Panda vs. Samsung SDI Co | Nanjing Panda vs. Murata Manufacturing Co |
| Alliance Data vs. SIVERS SEMICONDUCTORS AB | Alliance Data vs. NorAm Drilling AS | Alliance Data vs. Volkswagen AG | Alliance Data vs. Darden Restaurants |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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