Correlation Between Anhui Jianghuai and Panda Financial

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

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

Diversification Opportunities for Anhui Jianghuai and Panda Financial

0.6

Correlation Coefficient

Anhui Jianghuai  Panda Financial

Poor diversification

The 3 months correlation between Anhui and Panda is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile 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 Anhui Jianghuai 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 Anhui Jianghuai Automobile 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 Anhui Jianghuai i.e., Anhui Jianghuai and Panda Financial go up and down completely randomly.

Pair Corralation between Anhui Jianghuai and Panda Financial

Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to under-perform the Panda Financial. In addition to that, Anhui Jianghuai is 1.12 times more volatile than Panda Financial Holding. It trades about -0.04 of its total potential returns per unit of risk. Panda Financial Holding is currently generating about 0.09 per unit of volatility. If you would invest  1,348  in Panda Financial Holding on September 20, 2024 and sell it today you would earn a total of  71.00  from holding Panda Financial Holding or generate 5.27% return on investment over 90 days.

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

Anhui Jianghuai Automobile  vs.  Panda Financial Holding

Anhui Jianghuai Auto

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Jianghuai Automobile are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Jianghuai sustained solid returns over the last few months and may actually be approaching a breakup point.

Panda Financial Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Jianghuai and Panda Financial

The main advantage of trading using opposite Anhui Jianghuai and Panda Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Jianghuai 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 Anhui Jianghuai Automobile 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 CEOs Directory module to screen CEOs from public companies around the world.