Correlation Between China Mengniu and Unicharm
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Unicharm 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 Unicharm 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 Unicharm, you can compare the effects of market volatilities on China Mengniu and Unicharm 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 Unicharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Unicharm.
Diversification Opportunities for China Mengniu and Unicharm
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Unicharm is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm 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 Unicharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm has no effect on the direction of China Mengniu i.e., China Mengniu and Unicharm go up and down completely randomly.
Pair Corralation between China Mengniu and Unicharm
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Unicharm. In addition to that, China Mengniu is 1.0 times more volatile than Unicharm. It trades about -0.03 of its total potential returns per unit of risk. Unicharm is currently generating about -0.01 per unit of volatility. If you would invest 3,744 in Unicharm on September 14, 2024 and sell it today you would lose (1,252) from holding Unicharm or give up 33.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Mengniu Dairy vs. Unicharm
Performance |
| Timeline |
| China Mengniu Dairy |
| Unicharm |
China Mengniu and Unicharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Unicharm
The main advantage of trading using opposite China Mengniu and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Unicharm 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 Unicharm will offset losses from the drop in Unicharm's long position.| China Mengniu vs. Nestle SA ADR | China Mengniu vs. ConAgra Foods | China Mengniu vs. Hormel Foods | China Mengniu vs. Kraft Heinz Co |
| Unicharm vs. Estee Lauder Companies | Unicharm vs. Honest Company | Unicharm vs. Hims Hers Health | Unicharm vs. Procter Gamble |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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