Correlation Between Panda Financial and Ningbo Ligong

Can any of the company-specific risk be diversified away by investing in both Panda Financial and Ningbo Ligong 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 Ningbo Ligong 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 Ningbo Ligong Online, you can compare the effects of market volatilities on Panda Financial and Ningbo Ligong 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 Ningbo Ligong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Financial and Ningbo Ligong.

Diversification Opportunities for Panda Financial and Ningbo Ligong

-0.47

Correlation Coefficient

Panda Financial  Ningbo Ligong

Very good diversification

The 3 months correlation between Panda and Ningbo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Ningbo Ligong Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Ligong Online 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 Ningbo Ligong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Ligong Online has no effect on the direction of Panda Financial i.e., Panda Financial and Ningbo Ligong go up and down completely randomly.

Pair Corralation between Panda Financial and Ningbo Ligong

Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Ningbo Ligong. In addition to that, Panda Financial is 1.25 times more volatile than Ningbo Ligong Online. It trades about -0.11 of its total potential returns per unit of risk. Ningbo Ligong Online is currently generating about 0.08 per unit of volatility. If you would invest  1,315  in Ningbo Ligong Online on December 24, 2024 and sell it today you would earn a total of  119.00  from holding Ningbo Ligong Online or generate 9.05% return on investment over 90 days.

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

Panda Financial Holding  vs.  Ningbo Ligong Online

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.

Ningbo Ligong Online

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Ligong Online are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Ligong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Panda Financial and Ningbo Ligong

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

The idea behind Panda Financial Holding and Ningbo Ligong Online 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.