Correlation Between Sanbo Hospital and Panda Dairy

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

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

Diversification Opportunities for Sanbo Hospital and Panda Dairy

0.41

Correlation Coefficient

Sanbo Hospital  Panda Dairy

Very weak diversification

The 3 months correlation between Sanbo and Panda is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management 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 Sanbo Hospital 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 Sanbo Hospital Management 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 Sanbo Hospital i.e., Sanbo Hospital and Panda Dairy go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Panda Dairy

Assuming the 90 days trading horizon Sanbo Hospital Management is expected to generate 0.65 times more return on investment than Panda Dairy. However, Sanbo Hospital Management is 1.53 times less risky than Panda Dairy. It trades about -0.13 of its potential returns per unit of risk. Panda Dairy Corp is currently generating about -0.11 per unit of risk. If you would invest  4,976  in Sanbo Hospital Management on October 11, 2024 and sell it today you would lose (645.00) from holding Sanbo Hospital Management or give up 12.96% of portfolio value over 90 days.

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

Sanbo Hospital Management  vs.  Panda Dairy Corp

Sanbo Hospital Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sanbo Hospital Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanbo Hospital 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 Sanbo Hospital and Panda Dairy

The main advantage of trading using opposite Sanbo Hospital and Panda Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanbo Hospital 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 Sanbo Hospital Management 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.