Correlation Between Panda Financial and Northern United

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

Diversification Opportunities for Panda Financial and Northern United

0.85

Correlation Coefficient

Panda Financial  Northern United

Very poor diversification

The 3 months correlation between Panda and Northern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ 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 Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Panda Financial i.e., Panda Financial and Northern United go up and down completely randomly.

Pair Corralation between Panda Financial and Northern United

Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Northern United. But the stock apears to be less risky and, when comparing its historical volatility, Panda Financial Holding is 1.11 times less risky than Northern United. The stock trades about -0.12 of its potential returns per unit of risk. The Northern United Publishing is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  691.00  in Northern United Publishing on September 26, 2024 and sell it today you would lose (23.00) from holding Northern United Publishing or give up 3.33% of portfolio value over 90 days.

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

Panda Financial Holding  vs.  Northern United Publishing

Panda Financial Holding

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Northern United Publ

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern United Publishing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northern United sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panda Financial and Northern United

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

The idea behind Panda Financial Holding and Northern United 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.