Correlation Between China Mengniu and Kellanova
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Kellanova 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 China Mengniu and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mengniu Dairy and Kellanova, you can compare the effects of market volatilities on China Mengniu and Kellanova 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 China Mengniu with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Kellanova.
Diversification Opportunities for China Mengniu and Kellanova
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Kellanova is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and China Mengniu 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 China Mengniu Dairy are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of China Mengniu i.e., China Mengniu and Kellanova go up and down completely randomly.
Pair Corralation between China Mengniu and Kellanova
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Kellanova. In addition to that, China Mengniu is 2.09 times more volatile than Kellanova. It trades about -0.11 of its total potential returns per unit of risk. Kellanova is currently generating about -0.02 per unit of volatility. If you would invest 6,175 in Kellanova on January 21, 2024 and sell it today you would lose (437.00) from holding Kellanova or give up 7.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Kellanova
Performance |
| Timeline |
| China Mengniu Dairy |
| Kellanova |
China Mengniu and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Kellanova
The main advantage of trading using opposite China Mengniu and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.| China Mengniu vs. Kellanova | China Mengniu vs. Lancaster Colony | China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods |
| Kellanova vs. Green Globe International | Kellanova vs. Greenlane Holdings | Kellanova vs. 22nd Century Group | Kellanova vs. 1606 Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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