Correlation Between Shineco and General Mills
Can any of the company-specific risk be diversified away by investing in both Shineco and General Mills 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 Shineco and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shineco and General Mills, you can compare the effects of market volatilities on Shineco and General Mills 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 Shineco with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shineco and General Mills.
Diversification Opportunities for Shineco and General Mills
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shineco and General is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Shineco and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Shineco 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 Shineco are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Shineco i.e., Shineco and General Mills go up and down completely randomly.
Pair Corralation between Shineco and General Mills
Given the investment horizon of 90 days Shineco is expected to generate 52.08 times more return on investment than General Mills. However, Shineco is 52.08 times more volatile than General Mills. It trades about 0.05 of its potential returns per unit of risk. General Mills is currently generating about 0.03 per unit of risk. If you would invest 260.00 in Shineco on September 14, 2024 and sell it today you would lose (46.00) from holding Shineco or give up 17.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shineco vs. General Mills
Performance |
| Timeline |
| Shineco |
| General Mills |
Shineco and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shineco and General Mills
The main advantage of trading using opposite Shineco and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shineco position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.The idea behind Shineco and General Mills 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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