Correlation Between China Mengniu and Emmi AG
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Emmi AG 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 Emmi AG 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 Emmi AG, you can compare the effects of market volatilities on China Mengniu and Emmi AG 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 Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Emmi AG.
Diversification Opportunities for China Mengniu and Emmi AG
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Emmi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG 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 Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of China Mengniu i.e., China Mengniu and Emmi AG go up and down completely randomly.
Pair Corralation between China Mengniu and Emmi AG
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Emmi AG. In addition to that, China Mengniu is 3.05 times more volatile than Emmi AG. It trades about -0.03 of its total potential returns per unit of risk. Emmi AG is currently generating about -0.02 per unit of volatility. If you would invest 105,126 in Emmi AG on September 1, 2024 and sell it today you would lose (6,126) from holding Emmi AG or give up 5.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 64.78% |
| Values | Daily Returns |
China Mengniu Dairy vs. Emmi AG
Performance |
| Timeline |
| China Mengniu Dairy |
| Emmi AG |
China Mengniu and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Emmi AG
The main advantage of trading using opposite China Mengniu and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG'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 |
| Emmi AG vs. Kikkoman Corp ADR | Emmi AG vs. Kerry Group PLC | Emmi AG vs. Associated British Foods | Emmi AG vs. Nestle SA ADR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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