Correlation Between NYSE Composite and China Mengniu
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and China Mengniu Dairy, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and China Mengniu.
Diversification Opportunities for NYSE Composite and China Mengniu
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and China Mengniu go up and down completely randomly.
Pair Corralation between NYSE Composite and China Mengniu
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than China Mengniu. However, NYSE Composite is 3.99 times less risky than China Mengniu. It trades about 0.08 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about -0.03 per unit of risk. If you would invest 1,532,846 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 479,499 from holding NYSE Composite or generate 31.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. China Mengniu Dairy
Performance |
| Timeline |
NYSE Composite and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
China Mengniu Dairy
Pair trading matchups for China Mengniu
Pair Trading with NYSE Composite and China Mengniu
The main advantage of trading using opposite NYSE Composite and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. The A2 Milk | China Mengniu vs. BioAdaptives | China Mengniu vs. General Mills |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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