Correlation Between Xinjiang Baodi and Panda Financial

Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi and Panda Financial 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 Xinjiang Baodi and Panda Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinjiang Baodi Mining and Panda Financial Holding, you can compare the effects of market volatilities on Xinjiang Baodi and Panda Financial 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 Xinjiang Baodi with a short position of Panda Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Panda Financial.

Diversification Opportunities for Xinjiang Baodi and Panda Financial

0.77

Correlation Coefficient

Xinjiang Baodi  Panda Financial

Poor diversification

The 3 months correlation between Xinjiang and Panda is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Panda Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panda Financial Holding and Xinjiang Baodi 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 Xinjiang Baodi Mining are associated (or correlated) with Panda Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panda Financial Holding has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Panda Financial go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Panda Financial

Assuming the 90 days trading horizon Xinjiang Baodi is expected to generate 1.03 times less return on investment than Panda Financial. But when comparing it to its historical volatility, Xinjiang Baodi Mining is 1.11 times less risky than Panda Financial. It trades about 0.2 of its potential returns per unit of risk. Panda Financial Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,116  in Panda Financial Holding on September 16, 2024 and sell it today you would earn a total of  382.00  from holding Panda Financial Holding or generate 34.23% return on investment over 90 days.

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

Xinjiang Baodi Mining  vs.  Panda Financial Holding

Xinjiang Baodi Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi sustained solid returns over the last few months and may actually be approaching a breakup point.

Panda Financial Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 14 (%) 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.

Pair Trading with Xinjiang Baodi and Panda Financial

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

The idea behind Xinjiang Baodi Mining and Panda Financial Holding 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.