Correlation Between Panda Financial and COL Digital

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

Diversification Opportunities for Panda Financial and COL Digital

0.36

Correlation Coefficient

Panda Financial  COL Digital

Weak diversification

The 3 months correlation between Panda and COL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and COL Digital Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Digital Publishing 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 COL Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Digital Publishing has no effect on the direction of Panda Financial i.e., Panda Financial and COL Digital go up and down completely randomly.

Pair Corralation between Panda Financial and COL Digital

Assuming the 90 days trading horizon Panda Financial Holding is expected to generate 1.27 times more return on investment than COL Digital. However, Panda Financial is 1.27 times more volatile than COL Digital Publishing. It trades about -0.18 of its potential returns per unit of risk. COL Digital Publishing is currently generating about -0.4 per unit of risk. If you would invest  1,444  in Panda Financial Holding on October 11, 2024 and sell it today you would lose (231.00) from holding Panda Financial Holding or give up 16.0% of portfolio value over 90 days.

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

Panda Financial Holding  vs.  COL Digital Publishing

Panda Financial Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Panda Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

COL Digital Publishing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COL Digital Publishing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COL Digital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Panda Financial and COL Digital

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

The idea behind Panda Financial Holding and COL Digital Publishing 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.