Correlation Between China Mengniu and Barnes
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Barnes 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 Barnes 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 Barnes Group, you can compare the effects of market volatilities on China Mengniu and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Barnes.
Diversification Opportunities for China Mengniu and Barnes
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Barnes is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of China Mengniu i.e., China Mengniu and Barnes go up and down completely randomly.
Pair Corralation between China Mengniu and Barnes
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Barnes. In addition to that, China Mengniu is 1.72 times more volatile than Barnes Group. It trades about -0.01 of its total potential returns per unit of risk. Barnes Group is currently generating about 0.11 per unit of volatility. If you would invest 2,799 in Barnes Group on September 2, 2024 and sell it today you would earn a total of 1,885 from holding Barnes Group or generate 67.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Barnes Group
Performance |
| Timeline |
| China Mengniu Dairy |
| Barnes Group |
China Mengniu and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Barnes
The main advantage of trading using opposite China Mengniu and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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