Correlation Between Nanjing Panda and Tyson Foods

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

Diversification Opportunities for Nanjing Panda and Tyson Foods

0.3

Correlation Coefficient

Nanjing Panda  Tyson Foods

Weak diversification

The 3 months correlation between Nanjing and Tyson is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Tyson Foods go up and down completely randomly.

Pair Corralation between Nanjing Panda and Tyson Foods

Assuming the 90 days horizon Nanjing Panda Electronics is expected to generate 1.39 times more return on investment than Tyson Foods. However, Nanjing Panda is 1.39 times more volatile than Tyson Foods. It trades about 0.08 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.0 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.  Tyson Foods

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.

Tyson Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nanjing Panda and Tyson Foods

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

The idea behind Nanjing Panda Electronics and Tyson Foods 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.