Correlation Between Nanjing Panda and Global Ship

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

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

Diversification Opportunities for Nanjing Panda and Global Ship

-0.49

Correlation Coefficient

Nanjing Panda  Global Ship

Very good diversification

The 3 months correlation between Nanjing and Global is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Nanjing Panda 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 Nanjing Panda Electronics are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Global Ship go up and down completely randomly.

Pair Corralation between Nanjing Panda and Global Ship

If you would invest  2,042  in Global Ship Lease on October 22, 2024 and sell it today you would earn a total of  48.00  from holding Global Ship Lease or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Nanjing Panda Electronics  vs.  Global Ship Lease

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.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nanjing Panda and Global Ship

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

The idea behind Nanjing Panda Electronics and Global Ship Lease 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.