Correlation Between China Mengniu and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Kraft Heinz 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 Kraft Heinz 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 Kraft Heinz Co, you can compare the effects of market volatilities on China Mengniu and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Kraft Heinz.
Diversification Opportunities for China Mengniu and Kraft Heinz
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Kraft is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of China Mengniu i.e., China Mengniu and Kraft Heinz go up and down completely randomly.
Pair Corralation between China Mengniu and Kraft Heinz
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Kraft Heinz. In addition to that, China Mengniu is 4.18 times more volatile than Kraft Heinz Co. It trades about -0.44 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about 0.31 per unit of volatility. If you would invest 3,535 in Kraft Heinz Co on January 20, 2024 and sell it today you would earn a total of 176.00 from holding Kraft Heinz Co or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Mengniu Dairy vs. Kraft Heinz Co
Performance |
| Timeline |
| China Mengniu Dairy |
| Kraft Heinz |
China Mengniu and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Kraft Heinz
The main advantage of trading using opposite China Mengniu and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| China Mengniu vs. Kellanova | China Mengniu vs. Lancaster Colony | China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods |
| Kraft Heinz vs. Green Globe International | Kraft Heinz vs. Greenlane Holdings | Kraft Heinz vs. 22nd Century Group | Kraft Heinz 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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