Correlation Between Associated British and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Associated British and China Mengniu 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 Associated British and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and China Mengniu Dairy, you can compare the effects of market volatilities on Associated British and China Mengniu 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 Associated British with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and China Mengniu.
Diversification Opportunities for Associated British and China Mengniu
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and China Mengniu Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mengniu Dairy and Associated British 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 Associated British Foods are associated (or correlated) with China Mengniu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mengniu Dairy has no effect on the direction of Associated British i.e., Associated British and China Mengniu go up and down completely randomly.
Pair Corralation between Associated British and China Mengniu
Assuming the 90 days horizon Associated British Foods is expected to generate 0.53 times more return on investment than China Mengniu. However, Associated British Foods is 1.89 times less risky than China Mengniu. It trades about -0.06 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about -0.12 per unit of risk. If you would invest 3,271 in Associated British Foods on August 30, 2024 and sell it today you would lose (471.00) from holding Associated British Foods or give up 14.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Associated British Foods vs. China Mengniu Dairy
Performance |
| Timeline |
| Associated British Foods |
| China Mengniu Dairy |
Associated British and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and China Mengniu
The main advantage of trading using opposite Associated British and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, China Mengniu 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 China Mengniu will offset losses from the drop in China Mengniu's long position.| Associated British vs. Artisan Consumer Goods | Associated British vs. Altavoz Entertainment | Associated British vs. Avi Ltd ADR | Associated British vs. The a2 Milk |
| China Mengniu vs. Seneca Foods Corp | China Mengniu vs. Associated British Foods | China Mengniu vs. Natures Sunshine Products | China Mengniu vs. Marfrig Global Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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