Correlation Between Corning Incorporated and Nanjing Panda

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

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

Diversification Opportunities for Corning Incorporated and Nanjing Panda

0.69

Correlation Coefficient

Corning Incorporated  Nanjing Panda

Poor diversification

The 3 months correlation between Corning and Nanjing is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated i.e., Corning Incorporated and Nanjing Panda go up and down completely randomly.

Pair Corralation between Corning Incorporated and Nanjing Panda

Assuming the 90 days horizon Corning Incorporated is expected to generate 1.25 times less return on investment than Nanjing Panda. But when comparing it to its historical volatility, Corning Incorporated is 1.27 times less risky than Nanjing Panda. It trades about 0.11 of its potential returns per unit of risk. Nanjing Panda Electronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Nanjing Panda Electronics on October 23, 2024 and sell it today you would earn a total of  4.00  from holding Nanjing Panda Electronics or generate 13.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Corning Incorporated  vs.  Nanjing Panda Electronics

Corning Incorporated

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corning Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanjing Panda Electronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Panda Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nanjing Panda reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and Nanjing Panda

The main advantage of trading using opposite Corning Incorporated and Nanjing Panda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corning Incorporated 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 Corning Incorporated 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.