Correlation Between Panda Financial and Minmetals Capital

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

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

Diversification Opportunities for Panda Financial and Minmetals Capital

0.34

Correlation Coefficient

Panda Financial  Minmetals Capital

Weak diversification

The 3 months correlation between Panda and Minmetals is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Panda Financial 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 Panda Financial Holding are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Panda Financial i.e., Panda Financial and Minmetals Capital go up and down completely randomly.

Pair Corralation between Panda Financial and Minmetals Capital

Assuming the 90 days trading horizon Panda Financial Holding is expected to generate 0.8 times more return on investment than Minmetals Capital. However, Panda Financial Holding is 1.25 times less risky than Minmetals Capital. It trades about 0.05 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about 0.02 per unit of risk. If you would invest  1,166  in Panda Financial Holding on September 29, 2024 and sell it today you would earn a total of  91.00  from holding Panda Financial Holding or generate 7.8% return on investment over 90 days.

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

Panda Financial Holding  vs.  Minmetals Capital Co

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.

Minmetals Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Panda Financial and Minmetals Capital

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

The idea behind Panda Financial Holding and Minmetals Capital Co 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.