Correlation Between Nanjing Panda and Beazer Homes

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

Diversification Opportunities for Nanjing Panda and Beazer Homes

0.09

Correlation Coefficient

Nanjing Panda  Beazer Homes

Significant diversification

The 3 months correlation between Nanjing and Beazer is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA 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 Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Beazer Homes go up and down completely randomly.

Pair Corralation between Nanjing Panda and Beazer Homes

If you would invest  33.00  in Nanjing Panda Electronics on October 8, 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	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Nanjing Panda Electronics  vs.  Beazer Homes USA

Nanjing Panda Electronics

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Nanjing Panda Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Nanjing Panda may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Beazer Homes USA

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nanjing Panda and Beazer Homes

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

The idea behind Nanjing Panda Electronics and Beazer Homes USA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.