Correlation Between SMA SOLAR and Nanjing Panda

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

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

Diversification Opportunities for SMA SOLAR and Nanjing Panda

-0.21

Correlation Coefficient

SMA SOLAR  Nanjing Panda

Very good diversification

The 3 months correlation between SMA and Nanjing is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SMA SOLAR T and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics and SMA SOLAR 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 SMA SOLAR T are associated (or correlated) with Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of SMA SOLAR i.e., SMA SOLAR and Nanjing Panda go up and down completely randomly.

Pair Corralation between SMA SOLAR and Nanjing Panda

If you would invest  133.00  in SMA SOLAR T on October 11, 2024 and sell it today you would earn a total of  8.00  from holding SMA SOLAR T or generate 6.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

SMA SOLAR T  vs.  Nanjing Panda Electronics

SMA SOLAR T

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SMA SOLAR T are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SMA SOLAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanjing Panda Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Panda Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nanjing Panda reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMA SOLAR and Nanjing Panda

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

The idea behind SMA SOLAR T and Nanjing Panda Electronics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.