Correlation Between Panda Dairy and Fiberhome Telecommunicatio

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

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

Diversification Opportunities for Panda Dairy and Fiberhome Telecommunicatio

0.19

Correlation Coefficient

Panda Dairy  Fiberhome Telecommunicatio

Average diversification

The 3 months correlation between Panda and Fiberhome is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Panda Dairy Corp and Fiberhome Telecommunication Te in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiberhome Telecommunicatio and Panda Dairy 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 Dairy Corp are associated (or correlated) with Fiberhome Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiberhome Telecommunicatio has no effect on the direction of Panda Dairy i.e., Panda Dairy and Fiberhome Telecommunicatio go up and down completely randomly.

Pair Corralation between Panda Dairy and Fiberhome Telecommunicatio

Assuming the 90 days trading horizon Panda Dairy Corp is expected to generate 1.84 times more return on investment than Fiberhome Telecommunicatio. However, Panda Dairy is 1.84 times more volatile than Fiberhome Telecommunication Technologies. It trades about 0.08 of its potential returns per unit of risk. Fiberhome Telecommunication Technologies is currently generating about 0.05 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Panda Dairy Corp  vs.  Fiberhome Telecommunication Te

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.

Fiberhome Telecommunicatio

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fiberhome Telecommunication Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiberhome Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Panda Dairy and Fiberhome Telecommunicatio

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

The idea behind Panda Dairy Corp and Fiberhome Telecommunication Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.