Correlation Between China Shengmu and United Natural
Can any of the company-specific risk be diversified away by investing in both China Shengmu and United Natural 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 Shengmu and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Shengmu Organic and United Natural Foods, you can compare the effects of market volatilities on China Shengmu and United Natural 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 Shengmu with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Shengmu and United Natural.
Diversification Opportunities for China Shengmu and United Natural
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and United is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Shengmu Organic and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods and China Shengmu 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 Shengmu Organic are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of China Shengmu i.e., China Shengmu and United Natural go up and down completely randomly.
Pair Corralation between China Shengmu and United Natural
Assuming the 90 days trading horizon China Shengmu is expected to generate 91.23 times less return on investment than United Natural. But when comparing it to its historical volatility, China Shengmu Organic is 1.71 times less risky than United Natural. It trades about 0.01 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,852 in United Natural Foods on September 4, 2024 and sell it today you would earn a total of 438.00 from holding United Natural Foods or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Shengmu Organic vs. United Natural Foods
Performance |
| Timeline |
| China Shengmu Organic |
| United Natural Foods |
China Shengmu and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Shengmu and United Natural
The main advantage of trading using opposite China Shengmu and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Shengmu position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| China Shengmu vs. Renesas Electronics | China Shengmu vs. CosmoSteel Holdings Limited | China Shengmu vs. COSMOSTEEL HLDGS | China Shengmu vs. UMC Electronics Co |
| United Natural vs. Performance Food Group | United Natural vs. Superior Plus Corp | United Natural vs. NMI Holdings | United Natural vs. Origin Agritech |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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