Correlation Between Strait Innovation and Panda Dairy

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

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

Diversification Opportunities for Strait Innovation and Panda Dairy

0.44

Correlation Coefficient

Strait Innovation  Panda Dairy

Very weak diversification

The 3 months correlation between Strait and Panda is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Strait Innovation Internet 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 Strait Innovation 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 Strait Innovation Internet 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 Strait Innovation i.e., Strait Innovation and Panda Dairy go up and down completely randomly.

Pair Corralation between Strait Innovation and Panda Dairy

Assuming the 90 days trading horizon Strait Innovation is expected to generate 1.38 times less return on investment than Panda Dairy. But when comparing it to its historical volatility, Strait Innovation Internet is 1.19 times less risky than Panda Dairy. It trades about 0.07 of its potential returns per unit of risk. Panda Dairy Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,097  in Panda Dairy Corp on October 24, 2024 and sell it today you would earn a total of  421.00  from holding Panda Dairy Corp or generate 20.08% return on investment over 90 days.

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

Strait Innovation Internet  vs.  Panda Dairy Corp

Strait Innovation

Risk-Adjusted Performance

5 of 100

Modest

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

Panda Dairy Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Dairy Corp are ranked lower than 6 (%) 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 Strait Innovation and Panda Dairy

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

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.