Correlation Between Panda Financial and Tjk Machinery

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

Diversification Opportunities for Panda Financial and Tjk Machinery

0.66

Correlation Coefficient

Panda Financial  Tjk Machinery

Poor diversification

The 3 months correlation between Panda and Tjk is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin 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 Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Panda Financial i.e., Panda Financial and Tjk Machinery go up and down completely randomly.

Pair Corralation between Panda Financial and Tjk Machinery

Assuming the 90 days trading horizon Panda Financial Holding is expected to generate 0.87 times more return on investment than Tjk Machinery. However, Panda Financial Holding is 1.15 times less risky than Tjk Machinery. It trades about 0.13 of its potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about 0.07 per unit of risk. If you would invest  851.00  in Panda Financial Holding on September 28, 2024 and sell it today you would earn a total of  346.00  from holding Panda Financial Holding or generate 40.66% return on investment over 90 days.

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

Panda Financial Holding  vs.  Tjk Machinery Tianjin

Panda Financial Holding

Risk-Adjusted Performance

2 of 100

Modest

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.

Tjk Machinery Tianjin

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tjk Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panda Financial and Tjk Machinery

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

The idea behind Panda Financial Holding and Tjk Machinery Tianjin 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.