Correlation Between Ningxia Xiaoming and Panda Financial

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

By analyzing existing cross correlation between Ningxia Xiaoming Agriculture and Panda Financial Holding, you can compare the effects of market volatilities on Ningxia Xiaoming and Panda Financial 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 Ningxia Xiaoming with a short position of Panda Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Xiaoming and Panda Financial.

Diversification Opportunities for Ningxia Xiaoming and Panda Financial

0.55

Correlation Coefficient

Ningxia Xiaoming  Panda Financial

Very weak diversification

The 3 months correlation between Ningxia and Panda is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Xiaoming Agriculture and Panda Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panda Financial Holding and Ningxia Xiaoming 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 Ningxia Xiaoming Agriculture are associated (or correlated) with Panda Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panda Financial Holding has no effect on the direction of Ningxia Xiaoming i.e., Ningxia Xiaoming and Panda Financial go up and down completely randomly.

Pair Corralation between Ningxia Xiaoming and Panda Financial

Assuming the 90 days trading horizon Ningxia Xiaoming Agriculture is expected to generate 1.35 times more return on investment than Panda Financial. However, Ningxia Xiaoming is 1.35 times more volatile than Panda Financial Holding. It trades about 0.05 of its potential returns per unit of risk. Panda Financial Holding is currently generating about 0.05 per unit of risk. If you would invest  1,155  in Ningxia Xiaoming Agriculture on September 29, 2024 and sell it today you would earn a total of  87.00  from holding Ningxia Xiaoming Agriculture or generate 7.53% return on investment over 90 days.

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

Ningxia Xiaoming Agriculture  vs.  Panda Financial Holding

Ningxia Xiaoming Agr

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Xiaoming Agriculture are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Xiaoming sustained solid returns over the last few months and may actually be approaching a breakup point.

Panda Financial Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ningxia Xiaoming and Panda Financial

The main advantage of trading using opposite Ningxia Xiaoming and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Xiaoming position performs unexpectedly, Panda Financial 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 Financial will offset losses from the drop in Panda Financial's long position.

The idea behind Ningxia Xiaoming Agriculture and Panda Financial Holding 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.