Correlation Between China Mengniu and Netflix
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on China Mengniu and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Netflix.
Diversification Opportunities for China Mengniu and Netflix
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Netflix is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of China Mengniu i.e., China Mengniu and Netflix go up and down completely randomly.
Pair Corralation between China Mengniu and Netflix
Assuming the 90 days horizon China Mengniu is expected to generate 4.69 times less return on investment than Netflix. In addition to that, China Mengniu is 2.39 times more volatile than Netflix. It trades about 0.04 of its total potential returns per unit of risk. Netflix is currently generating about 0.49 per unit of volatility. If you would invest 75,374 in Netflix on August 31, 2024 and sell it today you would earn a total of 12,360 from holding Netflix or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Netflix
Performance |
| Timeline |
| China Mengniu Dairy |
| Netflix |
China Mengniu and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Netflix
The main advantage of trading using opposite China Mengniu and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix'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 |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |