Correlation Between Nanjing Panda and Constellation Software

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

Diversification Opportunities for Nanjing Panda and Constellation Software

0.0

Correlation Coefficient

Nanjing Panda  Constellation Software

Pay attention - limited upside

The 3 months correlation between Nanjing and Constellation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Constellation Software go up and down completely randomly.

Pair Corralation between Nanjing Panda and Constellation Software

If you would invest  302,500  in Constellation Software on December 24, 2024 and sell it today you would lose (500.00) from holding Constellation Software or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nanjing Panda Electronics  vs.  Constellation Software

Nanjing Panda Electronics

Risk-Adjusted Performance

Very Weak

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

Constellation Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Constellation Software is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nanjing Panda and Constellation Software

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

The idea behind Nanjing Panda Electronics and Constellation Software 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.