Correlation Between Beazer Homes and Nanjing Panda

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

By analyzing existing cross correlation between Beazer Homes USA and Nanjing Panda Electronics, you can compare the effects of market volatilities on Beazer Homes and Nanjing Panda 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 Beazer Homes with a short position of Nanjing Panda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Nanjing Panda.

Diversification Opportunities for Beazer Homes and Nanjing Panda

0.0

Correlation Coefficient

Beazer Homes  Nanjing Panda

Pay attention - limited upside

The 3 months correlation between Beazer and Nanjing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of Beazer Homes i.e., Beazer Homes and Nanjing Panda go up and down completely randomly.

Pair Corralation between Beazer Homes and Nanjing Panda

If you would invest  33.00  in Nanjing Panda Electronics on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Nanjing Panda Electronics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Beazer Homes USA  vs.  Nanjing Panda Electronics

Beazer Homes USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nanjing Panda Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nanjing Panda Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nanjing Panda is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Beazer Homes and Nanjing Panda

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

The idea behind Beazer Homes USA and Nanjing Panda Electronics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.