Correlation Between BioAdaptives and China Mengniu
Can any of the company-specific risk be diversified away by investing in both BioAdaptives 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 BioAdaptives and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioAdaptives and China Mengniu Dairy, you can compare the effects of market volatilities on BioAdaptives 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 BioAdaptives with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioAdaptives and China Mengniu.
Diversification Opportunities for BioAdaptives and China Mengniu
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BioAdaptives and China is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BioAdaptives 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 BioAdaptives 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 BioAdaptives 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 BioAdaptives i.e., BioAdaptives and China Mengniu go up and down completely randomly.
Pair Corralation between BioAdaptives and China Mengniu
Given the investment horizon of 90 days BioAdaptives is expected to generate 70.02 times more return on investment than China Mengniu. However, BioAdaptives is 70.02 times more volatile than China Mengniu Dairy. It trades about 0.28 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about 0.03 per unit of risk. If you would invest 0.03 in BioAdaptives on August 30, 2024 and sell it today you would earn a total of 9.97 from holding BioAdaptives or generate 33233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
BioAdaptives vs. China Mengniu Dairy
Performance |
| Timeline |
| BioAdaptives |
| China Mengniu Dairy |
BioAdaptives and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioAdaptives and China Mengniu
The main advantage of trading using opposite BioAdaptives and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioAdaptives 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.| BioAdaptives vs. Nates Food Co | BioAdaptives vs. Qed Connect | BioAdaptives vs. Branded Legacy | BioAdaptives vs. Grand Havana |
| China Mengniu vs. Nestle SA ADR | China Mengniu vs. ConAgra Foods | China Mengniu vs. Hormel Foods | China Mengniu vs. Kraft Heinz Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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