Correlation Between Aurora Innovation and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation 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 Aurora Innovation and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and China Mengniu Dairy, you can compare the effects of market volatilities on Aurora Innovation 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 Aurora Innovation with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and China Mengniu.
Diversification Opportunities for Aurora Innovation and China Mengniu
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and China is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation 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 Aurora Innovation 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 Aurora Innovation 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 Aurora Innovation i.e., Aurora Innovation and China Mengniu go up and down completely randomly.
Pair Corralation between Aurora Innovation and China Mengniu
Considering the 90-day investment horizon Aurora Innovation is expected to generate 1.33 times more return on investment than China Mengniu. However, Aurora Innovation is 1.33 times more volatile than China Mengniu Dairy. It trades about 0.13 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about 0.11 per unit of risk. If you would invest 426.00 in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of 221.00 from holding Aurora Innovation or generate 51.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. China Mengniu Dairy
Performance |
| Timeline |
| Aurora Innovation |
| China Mengniu Dairy |
Aurora Innovation and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and China Mengniu
The main advantage of trading using opposite Aurora Innovation and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation 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.| Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings | Aurora Innovation vs. CLPS Inc |
| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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