Correlation Between Unisplendour Corp and Panda Financial

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

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

Diversification Opportunities for Unisplendour Corp and Panda Financial

0.27

Correlation Coefficient

Unisplendour Corp  Panda Financial

Modest diversification

The 3 months correlation between Unisplendour and Panda is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Unisplendour Corp 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 Unisplendour Corp 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 Unisplendour Corp 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 Unisplendour Corp i.e., Unisplendour Corp and Panda Financial go up and down completely randomly.

Pair Corralation between Unisplendour Corp and Panda Financial

Assuming the 90 days trading horizon Unisplendour Corp is expected to under-perform the Panda Financial. But the stock apears to be less risky and, when comparing its historical volatility, Unisplendour Corp is 1.1 times less risky than Panda Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Panda Financial Holding is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,148  in Panda Financial Holding on October 8, 2024 and sell it today you would earn a total of  142.00  from holding Panda Financial Holding or generate 12.37% return on investment over 90 days.

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

Unisplendour Corp  vs.  Panda Financial Holding

Unisplendour Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unisplendour Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unisplendour Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Panda Financial Holding

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unisplendour Corp and Panda Financial

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

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.