Correlation Between Maple Leaf and COFCO Joycome
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and COFCO Joycome 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 Maple Leaf and COFCO Joycome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Leaf Foods and COFCO Joycome Foods, you can compare the effects of market volatilities on Maple Leaf and COFCO Joycome 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 Maple Leaf with a short position of COFCO Joycome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and COFCO Joycome.
Diversification Opportunities for Maple Leaf and COFCO Joycome
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maple and COFCO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Maple Leaf 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 Maple Leaf Foods are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Maple Leaf i.e., Maple Leaf and COFCO Joycome go up and down completely randomly.
Pair Corralation between Maple Leaf and COFCO Joycome
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.45 times more return on investment than COFCO Joycome. However, Maple Leaf is 1.45 times more volatile than COFCO Joycome Foods. It trades about 0.2 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about -0.24 per unit of risk. If you would invest 1,330 in Maple Leaf Foods on October 25, 2024 and sell it today you would earn a total of 90.00 from holding Maple Leaf Foods or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Maple Leaf Foods vs. COFCO Joycome Foods
Performance |
| Timeline |
| Maple Leaf Foods |
| COFCO Joycome Foods |
Maple Leaf and COFCO Joycome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and COFCO Joycome
The main advantage of trading using opposite Maple Leaf and COFCO Joycome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, COFCO Joycome 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 COFCO Joycome will offset losses from the drop in COFCO Joycome's long position.The idea behind Maple Leaf Foods and COFCO Joycome Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| COFCO Joycome vs. General Mills | COFCO Joycome vs. Danone SA | COFCO Joycome vs. Hormel Foods | COFCO Joycome vs. Kellogg Company |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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