Correlation Between Natures Sunshine and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Natures Sunshine 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 Natures Sunshine and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natures Sunshine Products and China Mengniu Dairy, you can compare the effects of market volatilities on Natures Sunshine 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 Natures Sunshine with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Sunshine and China Mengniu.
Diversification Opportunities for Natures Sunshine and China Mengniu
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Natures and China is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products 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 Natures Sunshine 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 Natures Sunshine Products 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 Natures Sunshine i.e., Natures Sunshine and China Mengniu go up and down completely randomly.
Pair Corralation between Natures Sunshine and China Mengniu
Given the investment horizon of 90 days Natures Sunshine Products is expected to generate 1.03 times more return on investment than China Mengniu. However, Natures Sunshine is 1.03 times more volatile than China Mengniu Dairy. It trades about 0.03 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about -0.12 per unit of risk. If you would invest 1,507 in Natures Sunshine Products on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Natures Sunshine Products or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Natures Sunshine Products vs. China Mengniu Dairy
Performance |
| Timeline |
| Natures Sunshine Products |
| China Mengniu Dairy |
Natures Sunshine and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natures Sunshine and China Mengniu
The main advantage of trading using opposite Natures Sunshine and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Sunshine 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.| Natures Sunshine vs. ELF Beauty | Natures Sunshine vs. Procter Gamble | Natures Sunshine vs. Colgate Palmolive | Natures Sunshine vs. Kenvue Inc |
| China Mengniu vs. Seneca Foods Corp | China Mengniu vs. Associated British Foods | China Mengniu vs. Natures Sunshine Products | China Mengniu vs. Marfrig Global Foods |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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