Correlation Between Kerry Group and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Kerry Group and China Mengniu 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 Kerry Group and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group plc and China Mengniu Dairy, you can compare the effects of market volatilities on Kerry Group and China Mengniu 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 Kerry Group with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and China Mengniu.
Diversification Opportunities for Kerry Group and China Mengniu
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kerry and China is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group plc and China Mengniu Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mengniu Dairy and Kerry Group 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 Kerry Group plc are associated (or correlated) with China Mengniu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mengniu Dairy has no effect on the direction of Kerry Group i.e., Kerry Group and China Mengniu go up and down completely randomly.
Pair Corralation between Kerry Group and China Mengniu
Assuming the 90 days horizon Kerry Group plc is expected to under-perform the China Mengniu. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kerry Group plc is 1.65 times less risky than China Mengniu. The pink sheet trades about -0.13 of its potential returns per unit of risk. The China Mengniu Dairy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,244 in China Mengniu Dairy on September 13, 2024 and sell it today you would lose (2.00) from holding China Mengniu Dairy or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry Group plc vs. China Mengniu Dairy
Performance |
| Timeline |
| Kerry Group plc |
| China Mengniu Dairy |
Kerry Group and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and China Mengniu
The main advantage of trading using opposite Kerry Group and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, China Mengniu 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 China Mengniu will offset losses from the drop in China Mengniu's long position.| Kerry Group vs. Kerry Group PLC | Kerry Group vs. Danone SA | Kerry Group vs. Carlsberg AS | Kerry Group vs. China Mengniu Dairy |
| China Mengniu vs. Nestle SA ADR | China Mengniu vs. ConAgra Foods | China Mengniu vs. Hormel Foods | China Mengniu vs. Kraft Heinz Co |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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