Correlation Between Northking Information and Panda Financial

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

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

Diversification Opportunities for Northking Information and Panda Financial

0.38

Correlation Coefficient

Northking Information  Panda Financial

Weak diversification

The 3 months correlation between Northking and Panda is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo 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 Northking Information 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 Northking Information Technology 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 Northking Information i.e., Northking Information and Panda Financial go up and down completely randomly.

Pair Corralation between Northking Information and Panda Financial

Assuming the 90 days trading horizon Northking Information Technology is expected to under-perform the Panda Financial. But the stock apears to be less risky and, when comparing its historical volatility, Northking Information Technology is 1.06 times less risky than Panda Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Panda Financial Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,138  in Panda Financial Holding on September 22, 2024 and sell it today you would earn a total of  301.00  from holding Panda Financial Holding or generate 26.45% return on investment over 90 days.

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

Northking Information Technolo  vs.  Panda Financial Holding

Northking Information

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northking Information Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northking Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Panda Financial Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 10 (%) 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 Northking Information and Panda Financial

The main advantage of trading using opposite Northking Information and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northking Information 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 Northking Information Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.