Correlation Between Nanjing Panda and Waste Management
Can any of the company-specific risk be diversified away by investing in both Nanjing Panda and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Nanjing Panda and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Panda and Waste Management.
Diversification Opportunities for Nanjing Panda and Waste Management
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nanjing and Waste is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Waste Management go up and down completely randomly.
Pair Corralation between Nanjing Panda and Waste Management
Assuming the 90 days horizon Nanjing Panda Electronics is expected to generate 5.75 times more return on investment than Waste Management. However, Nanjing Panda is 5.75 times more volatile than Waste Management. It trades about 0.03 of its potential returns per unit of risk. Waste Management is currently generating about 0.08 per unit of risk. If you would invest 36.00 in Nanjing Panda Electronics on October 16, 2024 and sell it today you would lose (3.00) from holding Nanjing Panda Electronics or give up 8.33% 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. Waste Management
Performance |
| Timeline |
| Nanjing Panda Electronics |
| Waste Management |
Nanjing Panda and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Panda and Waste Management
The main advantage of trading using opposite Nanjing Panda and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Panda position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Nanjing Panda vs. Virtus Investment Partners | Nanjing Panda vs. Zijin Mining Group | Nanjing Panda vs. FIRST SAVINGS FINL | Nanjing Panda vs. CHRYSALIS INVESTMENTS LTD |
| Waste Management vs. Fortescue Metals Group | Waste Management vs. KIMBALL ELECTRONICS | Waste Management vs. Nanjing Panda Electronics | Waste Management vs. CHRYSALIS INVESTMENTS LTD |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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