Correlation Between China Mengniu and Empire State
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Empire State 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 Empire State 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 Empire State Realty, you can compare the effects of market volatilities on China Mengniu and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Empire State.
Diversification Opportunities for China Mengniu and Empire State
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Empire is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of China Mengniu i.e., China Mengniu and Empire State go up and down completely randomly.
Pair Corralation between China Mengniu and Empire State
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Empire State. In addition to that, China Mengniu is 1.31 times more volatile than Empire State Realty. It trades about -0.03 of its total potential returns per unit of risk. Empire State Realty is currently generating about 0.06 per unit of volatility. If you would invest 665.00 in Empire State Realty on September 2, 2024 and sell it today you would earn a total of 431.00 from holding Empire State Realty or generate 64.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Empire State Realty
Performance |
| Timeline |
| China Mengniu Dairy |
| Empire State Realty |
China Mengniu and Empire State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Empire State
The main advantage of trading using opposite China Mengniu and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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