Correlation Between Panda Financial and SI TECH

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

Diversification Opportunities for Panda Financial and SI TECH

0.24

Correlation Coefficient

Panda Financial  SI TECH

Modest diversification

The 3 months correlation between Panda and 300608 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and SI TECH Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SI TECH Information 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 SI TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SI TECH Information has no effect on the direction of Panda Financial i.e., Panda Financial and SI TECH go up and down completely randomly.

Pair Corralation between Panda Financial and SI TECH

Assuming the 90 days trading horizon Panda Financial is expected to generate 5.06 times less return on investment than SI TECH. But when comparing it to its historical volatility, Panda Financial Holding is 1.52 times less risky than SI TECH. It trades about 0.01 of its potential returns per unit of risk. SI TECH Information Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  886.00  in SI TECH Information Technology on October 13, 2024 and sell it today you would earn a total of  61.00  from holding SI TECH Information Technology or generate 6.88% return on investment over 90 days.

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

Panda Financial Holding  vs.  SI TECH Information Technology

Panda Financial Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 2 (%) 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.

SI TECH Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SI TECH Information Technology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Panda Financial and SI TECH

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

The idea behind Panda Financial Holding and SI TECH Information Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.