Correlation Between China Mengniu and EZGO Technologies
Can any of the company-specific risk be diversified away by investing in both China Mengniu and EZGO Technologies 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 EZGO Technologies 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 EZGO Technologies, you can compare the effects of market volatilities on China Mengniu and EZGO Technologies 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 EZGO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and EZGO Technologies.
Diversification Opportunities for China Mengniu and EZGO Technologies
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and EZGO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies 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 EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of China Mengniu i.e., China Mengniu and EZGO Technologies go up and down completely randomly.
Pair Corralation between China Mengniu and EZGO Technologies
Assuming the 90 days horizon China Mengniu Dairy is expected to generate 0.58 times more return on investment than EZGO Technologies. However, China Mengniu Dairy is 1.72 times less risky than EZGO Technologies. It trades about -0.01 of its potential returns per unit of risk. EZGO Technologies is currently generating about -0.07 per unit of risk. If you would invest 2,625 in China Mengniu Dairy on September 2, 2024 and sell it today you would lose (481.00) from holding China Mengniu Dairy or give up 18.32% 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. EZGO Technologies
Performance |
| Timeline |
| China Mengniu Dairy |
| EZGO Technologies |
China Mengniu and EZGO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and EZGO Technologies
The main advantage of trading using opposite China Mengniu and EZGO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, EZGO Technologies 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 EZGO Technologies will offset losses from the drop in EZGO Technologies' long position.| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
| EZGO Technologies vs. VF Corporation | EZGO Technologies vs. Levi Strauss Co | EZGO Technologies vs. Columbia Sportswear | EZGO Technologies vs. Oxford Industries |
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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