Correlation Between Panda Financial and Unisplendour Corp

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

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

Diversification Opportunities for Panda Financial and Unisplendour Corp

-0.55

Correlation Coefficient

Panda Financial  Unisplendour Corp

Excellent diversification

The 3 months correlation between Panda and Unisplendour is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Unisplendour Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisplendour Corp and Panda Financial 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 Financial Holding are associated (or correlated) with Unisplendour Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisplendour Corp has no effect on the direction of Panda Financial i.e., Panda Financial and Unisplendour Corp go up and down completely randomly.

Pair Corralation between Panda Financial and Unisplendour Corp

Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Unisplendour Corp. But the stock apears to be less risky and, when comparing its historical volatility, Panda Financial Holding is 1.39 times less risky than Unisplendour Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Unisplendour Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,919  in Unisplendour Corp on December 28, 2024 and sell it today you would lose (195.00) from holding Unisplendour Corp or give up 6.68% of portfolio value over 90 days.

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

Panda Financial Holding  vs.  Unisplendour Corp

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.

Unisplendour Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unisplendour Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unisplendour Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Panda Financial and Unisplendour Corp

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

The idea behind Panda Financial Holding and Unisplendour 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.