Correlation Between Nanjing Panda and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both Nanjing Panda and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics, you can compare the effects of market volatilities on Nanjing Panda and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Panda and Richardson Electronics.
Diversification Opportunities for Nanjing Panda and Richardson Electronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nanjing and Richardson is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Richardson Electronics go up and down completely randomly.
Pair Corralation between Nanjing Panda and Richardson Electronics
Assuming the 90 days horizon Nanjing Panda Electronics is expected to generate 1.66 times more return on investment than Richardson Electronics. However, Nanjing Panda is 1.66 times more volatile than Richardson Electronics. It trades about 0.03 of its potential returns per unit of risk. Richardson Electronics is currently generating about 0.0 per unit of risk. If you would invest 39.00 in Nanjing Panda Electronics on October 23, 2024 and sell it today you would lose (6.00) from holding Nanjing Panda Electronics or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nanjing Panda Electronics vs. Richardson Electronics
Performance |
| Timeline |
| Nanjing Panda Electronics |
| Richardson Electronics |
Nanjing Panda and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Panda and Richardson Electronics
The main advantage of trading using opposite Nanjing Panda and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Panda position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| Nanjing Panda vs. Amphenol | Nanjing Panda vs. Hon Hai Precision | Nanjing Panda vs. Samsung SDI Co | Nanjing Panda vs. Murata Manufacturing Co |
| Richardson Electronics vs. Amphenol | Richardson Electronics vs. Hon Hai Precision | Richardson Electronics vs. Samsung SDI Co | Richardson Electronics vs. Murata Manufacturing Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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