Correlation Between China Mengniu and Danone SA
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Danone SA 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 China Mengniu and Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mengniu Dairy and Danone SA, you can compare the effects of market volatilities on China Mengniu and Danone SA 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 China Mengniu with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Danone SA.
Diversification Opportunities for China Mengniu and Danone SA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Danone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and China Mengniu 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 China Mengniu Dairy are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of China Mengniu i.e., China Mengniu and Danone SA go up and down completely randomly.
Pair Corralation between China Mengniu and Danone SA
If you would invest 250.00 in China Mengniu Dairy on January 19, 2024 and sell it today you would earn a total of 0.00 from holding China Mengniu Dairy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Mengniu Dairy vs. Danone SA
Performance |
| Timeline |
| China Mengniu Dairy |
| Danone SA |
China Mengniu and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Danone SA
The main advantage of trading using opposite China Mengniu and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Danone SA 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 Danone SA will offset losses from the drop in Danone SA's long position.| China Mengniu vs. Kellanova | China Mengniu vs. Lancaster Colony | China Mengniu vs. The A2 Milk | China Mengniu vs. Altavoz Entertainment |
| Danone SA vs. Kellanova | Danone SA vs. Lancaster Colony | Danone SA vs. The A2 Milk | Danone SA vs. Altavoz Entertainment |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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