Correlation Between CHINA EDUCATION and General Mills
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and General Mills 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 CHINA EDUCATION and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and General Mills, you can compare the effects of market volatilities on CHINA EDUCATION and General Mills 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 CHINA EDUCATION with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and General Mills.
Diversification Opportunities for CHINA EDUCATION and General Mills
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and General is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and General Mills go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and General Mills
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 1.73 times more return on investment than General Mills. However, CHINA EDUCATION is 1.73 times more volatile than General Mills. It trades about 0.01 of its potential returns per unit of risk. General Mills is currently generating about -0.18 per unit of risk. If you would invest 41.00 in CHINA EDUCATION GROUP on November 3, 2024 and sell it today you would earn a total of 0.00 from holding CHINA EDUCATION GROUP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. General Mills
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| General Mills |
CHINA EDUCATION and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and General Mills
The main advantage of trading using opposite CHINA EDUCATION and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| CHINA EDUCATION vs. CARDINAL HEALTH | CHINA EDUCATION vs. WESANA HEALTH HOLD | CHINA EDUCATION vs. CLOVER HEALTH INV | CHINA EDUCATION vs. MPH Health Care |
| General Mills vs. IDP EDUCATION LTD | General Mills vs. DEVRY EDUCATION GRP | General Mills vs. American Public Education | General Mills vs. EMBARK EDUCATION LTD |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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