Correlation Between Citic Guoan and Panda Financial

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

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

Diversification Opportunities for Citic Guoan and Panda Financial

0.44

Correlation Coefficient

Citic Guoan  Panda Financial

Very weak diversification

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

Pair Corralation between Citic Guoan and Panda Financial

Assuming the 90 days trading horizon Citic Guoan Wine is expected to generate 0.87 times more return on investment than Panda Financial. However, Citic Guoan Wine is 1.15 times less risky than Panda Financial. It trades about 0.07 of its potential returns per unit of risk. Panda Financial Holding is currently generating about -0.11 per unit of risk. If you would invest  544.00  in Citic Guoan Wine on December 24, 2024 and sell it today you would earn a total of  45.00  from holding Citic Guoan Wine or generate 8.27% return on investment over 90 days.

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

Citic Guoan Wine  vs.  Panda Financial Holding

Citic Guoan Wine

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Guoan Wine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Guoan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Panda Financial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panda Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citic Guoan and Panda Financial

The main advantage of trading using opposite Citic Guoan and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan 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 Citic Guoan Wine 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.