Correlation Between China Mengniu and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Yanzhou Coal 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 Yanzhou Coal 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 Yanzhou Coal Mining, you can compare the effects of market volatilities on China Mengniu and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Yanzhou Coal.
Diversification Opportunities for China Mengniu and Yanzhou Coal
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Yanzhou is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of China Mengniu i.e., China Mengniu and Yanzhou Coal go up and down completely randomly.
Pair Corralation between China Mengniu and Yanzhou Coal
Assuming the 90 days horizon China Mengniu Dairy is expected to generate 4.07 times more return on investment than Yanzhou Coal. However, China Mengniu is 4.07 times more volatile than Yanzhou Coal Mining. It trades about 0.2 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.22 per unit of risk. If you would invest 2,001 in China Mengniu Dairy on November 29, 2024 and sell it today you would earn a total of 275.00 from holding China Mengniu Dairy or generate 13.74% 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. Yanzhou Coal Mining
Performance |
| Timeline |
| China Mengniu Dairy |
| Yanzhou Coal Mining |
China Mengniu and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Yanzhou Coal
The main advantage of trading using opposite China Mengniu and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal'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 |
| Yanzhou Coal vs. Geo Energy Resources | Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Bukit Asam Tbk | Yanzhou Coal vs. Thungela Resources Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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