Correlation Between COFCO Joycome and Danone SA
Can any of the company-specific risk be diversified away by investing in both COFCO Joycome 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 COFCO Joycome and Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFCO Joycome Foods and Danone SA, you can compare the effects of market volatilities on COFCO Joycome 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 COFCO Joycome with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and Danone SA.
Diversification Opportunities for COFCO Joycome and Danone SA
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between COFCO and Danone is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and COFCO Joycome 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 COFCO Joycome Foods 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 COFCO Joycome i.e., COFCO Joycome and Danone SA go up and down completely randomly.
Pair Corralation between COFCO Joycome and Danone SA
Assuming the 90 days horizon COFCO Joycome Foods is expected to generate 1.86 times more return on investment than Danone SA. However, COFCO Joycome is 1.86 times more volatile than Danone SA. It trades about 0.13 of its potential returns per unit of risk. Danone SA is currently generating about 0.07 per unit of risk. If you would invest 16.00 in COFCO Joycome Foods on December 1, 2024 and sell it today you would earn a total of 1.00 from holding COFCO Joycome Foods or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COFCO Joycome Foods vs. Danone SA
Performance |
| Timeline |
| COFCO Joycome Foods |
| Danone SA |
COFCO Joycome and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFCO Joycome and Danone SA
The main advantage of trading using opposite COFCO Joycome and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFCO Joycome 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.| COFCO Joycome vs. ALEFARM BREWING DK 05 | COFCO Joycome vs. Sanyo Chemical Industries | COFCO Joycome vs. Tokyu Construction Co | COFCO Joycome vs. Penta Ocean Construction Co |
| Danone SA vs. Haverty Furniture Companies | Danone SA vs. CAIRN HOMES EO | Danone SA vs. OFFICE DEPOT | Danone SA vs. Autohome |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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