Correlation Between Panda Financial and Montage Technology

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

Diversification Opportunities for Panda Financial and Montage Technology

0.18

Correlation Coefficient

Panda Financial  Montage Technology

Average diversification

The 3 months correlation between Panda and Montage is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Montage Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Technology 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 Montage Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Technology has no effect on the direction of Panda Financial i.e., Panda Financial and Montage Technology go up and down completely randomly.

Pair Corralation between Panda Financial and Montage Technology

Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the Montage Technology. In addition to that, Panda Financial is 1.06 times more volatile than Montage Technology Co. It trades about -0.11 of its total potential returns per unit of risk. Montage Technology Co is currently generating about 0.01 per unit of volatility. If you would invest  6,834  in Montage Technology Co on October 4, 2024 and sell it today you would lose (44.00) from holding Montage Technology Co or give up 0.64% of portfolio value over 90 days.

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

Panda Financial Holding  vs.  Montage Technology Co

Panda Financial Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 7 (%) 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.

Montage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montage Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Panda Financial and Montage Technology

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

The idea behind Panda Financial Holding and Montage Technology Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.