Correlation Between Grupo Bimbo and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo 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 Grupo Bimbo and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Bimbo SAB and China Mengniu Dairy, you can compare the effects of market volatilities on Grupo Bimbo 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 Grupo Bimbo with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and China Mengniu.
Diversification Opportunities for Grupo Bimbo and China Mengniu
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB 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 Grupo Bimbo 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 Grupo Bimbo SAB 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 Grupo Bimbo i.e., Grupo Bimbo and China Mengniu go up and down completely randomly.
Pair Corralation between Grupo Bimbo and China Mengniu
Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the China Mengniu. But the pink sheet apears to be less risky and, when comparing its historical volatility, Grupo Bimbo SAB is 1.34 times less risky than China Mengniu. The pink sheet trades about -0.07 of its potential returns per unit of risk. The China Mengniu Dairy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,901 in China Mengniu Dairy on August 27, 2024 and sell it today you would lose (737.00) from holding China Mengniu Dairy or give up 25.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.1% |
| Values | Daily Returns |
Grupo Bimbo SAB vs. China Mengniu Dairy
Performance |
| Timeline |
| Grupo Bimbo SAB |
| China Mengniu Dairy |
Grupo Bimbo and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Bimbo and China Mengniu
The main advantage of trading using opposite Grupo Bimbo and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo 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.| Grupo Bimbo vs. Artisan Consumer Goods | Grupo Bimbo vs. The A2 Milk | Grupo Bimbo vs. BioAdaptives | Grupo Bimbo vs. General Mills |
| China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. The A2 Milk | China Mengniu vs. BioAdaptives | 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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