Correlation Between China Feihe and Naturally Splendid
Can any of the company-specific risk be diversified away by investing in both China Feihe and Naturally Splendid 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 Feihe and Naturally Splendid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Feihe Limited and Naturally Splendid Enterprises, you can compare the effects of market volatilities on China Feihe and Naturally Splendid 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 Feihe with a short position of Naturally Splendid. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Feihe and Naturally Splendid.
Diversification Opportunities for China Feihe and Naturally Splendid
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Naturally is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Feihe Limited and Naturally Splendid Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturally Splendid and China Feihe 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 Feihe Limited are associated (or correlated) with Naturally Splendid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturally Splendid has no effect on the direction of China Feihe i.e., China Feihe and Naturally Splendid go up and down completely randomly.
Pair Corralation between China Feihe and Naturally Splendid
Assuming the 90 days horizon China Feihe is expected to generate 11.2 times less return on investment than Naturally Splendid. But when comparing it to its historical volatility, China Feihe Limited is 11.05 times less risky than Naturally Splendid. It trades about 0.07 of its potential returns per unit of risk. Naturally Splendid Enterprises is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.10 in Naturally Splendid Enterprises on September 2, 2024 and sell it today you would lose (3.10) from holding Naturally Splendid Enterprises or give up 43.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Feihe Limited vs. Naturally Splendid Enterprises
Performance |
| Timeline |
| China Feihe Limited |
| Naturally Splendid |
China Feihe and Naturally Splendid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Feihe and Naturally Splendid
The main advantage of trading using opposite China Feihe and Naturally Splendid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Feihe position performs unexpectedly, Naturally Splendid 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 Naturally Splendid will offset losses from the drop in Naturally Splendid's long position.| China Feihe vs. WH Group Limited | China Feihe vs. BG Foods | China Feihe vs. JBS SA | China Feihe vs. Marfrig Global Foods |
| Naturally Splendid vs. Blue Star Foods | Naturally Splendid vs. Bon Natural Life | Naturally Splendid vs. Grand Havana |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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