Correlation Between Nanjing Panda and TT Electronics

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

Diversification Opportunities for Nanjing Panda and TT Electronics

0.27

Correlation Coefficient

Nanjing Panda  TT Electronics

Modest diversification

The 3 months correlation between Nanjing and 7TT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC 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 TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and TT Electronics go up and down completely randomly.

Pair Corralation between Nanjing Panda and TT Electronics

Assuming the 90 days horizon Nanjing Panda Electronics is expected to generate 0.51 times more return on investment than TT Electronics. However, Nanjing Panda Electronics is 1.95 times less risky than TT Electronics. It trades about 0.08 of its potential returns per unit of risk. TT Electronics PLC is currently generating about 0.03 per unit of risk. If you would invest  30.00  in Nanjing Panda Electronics on October 25, 2024 and sell it today you would earn a total of  3.00  from holding Nanjing Panda Electronics or generate 10.0% return on investment over 90 days.

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

Nanjing Panda Electronics  vs.  TT Electronics PLC

Nanjing Panda Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Panda Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nanjing Panda may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TT Electronics PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TT Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nanjing Panda and TT Electronics

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

The idea behind Nanjing Panda Electronics and TT Electronics PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.