Correlation Between Vats Liquor and Panda Financial

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

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

Diversification Opportunities for Vats Liquor and Panda Financial

0.36

Correlation Coefficient

Vats Liquor  Panda Financial

Weak diversification

The 3 months correlation between Vats and Panda is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vats Liquor Chain 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 Vats Liquor 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 Vats Liquor Chain 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 Vats Liquor i.e., Vats Liquor and Panda Financial go up and down completely randomly.

Pair Corralation between Vats Liquor and Panda Financial

Assuming the 90 days trading horizon Vats Liquor Chain is expected to under-perform the Panda Financial. In addition to that, Vats Liquor is 1.03 times more volatile than Panda Financial Holding. It trades about -0.02 of its total potential returns per unit of risk. Panda Financial Holding is currently generating about 0.01 per unit of volatility. If you would invest  1,335  in Panda Financial Holding on October 11, 2024 and sell it today you would lose (109.00) from holding Panda Financial Holding or give up 8.16% of portfolio value over 90 days.

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

Vats Liquor Chain  vs.  Panda Financial Holding

Vats Liquor Chain

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vats Liquor Chain are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vats Liquor 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

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Panda Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vats Liquor and Panda Financial

The main advantage of trading using opposite Vats Liquor and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vats Liquor 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 Vats Liquor Chain 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.