Correlation Between China Mengniu and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Atmos Energy 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 Mengniu and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mengniu Dairy and Atmos Energy, you can compare the effects of market volatilities on China Mengniu and Atmos Energy 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 Mengniu with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Atmos Energy.
Diversification Opportunities for China Mengniu and Atmos Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Atmos is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and China Mengniu 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 Mengniu Dairy are associated (or correlated) with Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of China Mengniu i.e., China Mengniu and Atmos Energy go up and down completely randomly.
Pair Corralation between China Mengniu and Atmos Energy
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Atmos Energy. In addition to that, China Mengniu is 3.3 times more volatile than Atmos Energy. It trades about -0.03 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.09 per unit of volatility. If you would invest 11,276 in Atmos Energy on September 1, 2024 and sell it today you would earn a total of 3,856 from holding Atmos Energy or generate 34.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Atmos Energy
Performance |
| Timeline |
| China Mengniu Dairy |
| Atmos Energy |
China Mengniu and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Atmos Energy
The main advantage of trading using opposite China Mengniu and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| China Mengniu vs. The A2 Milk | China Mengniu vs. Altavoz Entertainment | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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