Correlation Between China Mengniu and Curtiss Motorcycles
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Curtiss Motorcycles 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 Curtiss Motorcycles 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 Curtiss Motorcycles, you can compare the effects of market volatilities on China Mengniu and Curtiss Motorcycles 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 Curtiss Motorcycles. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Curtiss Motorcycles.
Diversification Opportunities for China Mengniu and Curtiss Motorcycles
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Curtiss is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Curtiss Motorcycles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Motorcycles 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 Curtiss Motorcycles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Motorcycles has no effect on the direction of China Mengniu i.e., China Mengniu and Curtiss Motorcycles go up and down completely randomly.
Pair Corralation between China Mengniu and Curtiss Motorcycles
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Curtiss Motorcycles. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Mengniu Dairy is 22.88 times less risky than Curtiss Motorcycles. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Curtiss Motorcycles is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9.70 in Curtiss Motorcycles on September 2, 2024 and sell it today you would lose (7.40) from holding Curtiss Motorcycles or give up 76.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Curtiss Motorcycles
Performance |
| Timeline |
| China Mengniu Dairy |
| Curtiss Motorcycles |
China Mengniu and Curtiss Motorcycles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Curtiss Motorcycles
The main advantage of trading using opposite China Mengniu and Curtiss Motorcycles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Curtiss Motorcycles 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 Curtiss Motorcycles will offset losses from the drop in Curtiss Motorcycles' long position.| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
| Curtiss Motorcycles vs. Life Electric Vehicles | Curtiss Motorcycles vs. EZGO Technologies | Curtiss Motorcycles vs. Marine Products | Curtiss Motorcycles vs. China Mengniu Dairy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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