Correlation Between COL Digital and Panda Dairy

Can any of the company-specific risk be diversified away by investing in both COL Digital and Panda Dairy 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 COL Digital and Panda Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COL Digital Publishing and Panda Dairy Corp, you can compare the effects of market volatilities on COL Digital 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 COL Digital with a short position of Panda Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Digital and Panda Dairy.

Diversification Opportunities for COL Digital and Panda Dairy

0.94

Correlation Coefficient

COL Digital  Panda Dairy

Almost no diversification

The 3 months correlation between COL and Panda is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding COL Digital Publishing 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 COL Digital 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 COL Digital Publishing 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 COL Digital i.e., COL Digital and Panda Dairy go up and down completely randomly.

Pair Corralation between COL Digital and Panda Dairy

Assuming the 90 days trading horizon COL Digital Publishing is expected to generate 1.5 times more return on investment than Panda Dairy. However, COL Digital is 1.5 times more volatile than Panda Dairy Corp. It trades about 0.19 of its potential returns per unit of risk. Panda Dairy Corp is currently generating about 0.18 per unit of risk. If you would invest  1,705  in COL Digital Publishing on September 3, 2024 and sell it today you would earn a total of  1,333  from holding COL Digital Publishing or generate 78.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

COL Digital Publishing  vs.  Panda Dairy Corp

COL Digital Publishing

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COL Digital Publishing are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COL Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Panda Dairy Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Dairy Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COL Digital and Panda Dairy

The main advantage of trading using opposite COL Digital and Panda Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COL Digital 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.

The idea behind COL Digital Publishing and Panda Dairy Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Valuation module to check real value of public entities based on technical and fundamental data.