Correlation Between Bunzl Plc and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc 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 Bunzl Plc and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and China Mengniu Dairy, you can compare the effects of market volatilities on Bunzl Plc 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 Bunzl Plc with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and China Mengniu.
Diversification Opportunities for Bunzl Plc and China Mengniu
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bunzl and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc 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 Bunzl Plc 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 Bunzl plc 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 Bunzl Plc i.e., Bunzl Plc and China Mengniu go up and down completely randomly.
Pair Corralation between Bunzl Plc and China Mengniu
Assuming the 90 days horizon Bunzl plc is expected to generate 0.32 times more return on investment than China Mengniu. However, Bunzl plc is 3.12 times less risky than China Mengniu. It trades about 0.2 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about 0.02 per unit of risk. If you would invest 2,196 in Bunzl plc on September 13, 2024 and sell it today you would earn a total of 83.00 from holding Bunzl plc or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunzl plc vs. China Mengniu Dairy
Performance |
| Timeline |
| Bunzl plc |
| China Mengniu Dairy |
Bunzl Plc and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and China Mengniu
The main advantage of trading using opposite Bunzl Plc and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc 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.| Bunzl Plc vs. HUMANA INC | Bunzl Plc vs. Barloworld Ltd ADR | Bunzl Plc vs. Morningstar Unconstrained Allocation | Bunzl Plc vs. Thrivent High Yield |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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