Correlation Between China Mengniu and Artisan Consumer

Can any of the company-specific risk be diversified away by investing in both China Mengniu and Artisan Consumer 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 Artisan Consumer 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 Artisan Consumer Goods, you can compare the effects of market volatilities on China Mengniu and Artisan Consumer 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 Artisan Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Artisan Consumer.

Diversification Opportunities for China Mengniu and Artisan Consumer

-0.09

Correlation Coefficient

China Mengniu  Artisan Consumer

Good diversification

The 3 months correlation between China and Artisan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Artisan Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Consumer Goods 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 Artisan Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Consumer Goods has no effect on the direction of China Mengniu i.e., China Mengniu and Artisan Consumer go up and down completely randomly.

Pair Corralation between China Mengniu and Artisan Consumer

Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Artisan Consumer. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Mengniu Dairy is 1.12 times less risky than Artisan Consumer. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Artisan Consumer Goods is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Artisan Consumer Goods on January 31, 2024 and sell it today you would earn a total of  2.00  from holding Artisan Consumer Goods or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Mengniu Dairy  vs.  Artisan Consumer Goods

China Mengniu Dairy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Mengniu Dairy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, China Mengniu is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Artisan Consumer Goods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Consumer Goods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Artisan Consumer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Mengniu and Artisan Consumer

The main advantage of trading using opposite China Mengniu and Artisan Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Artisan Consumer 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 Artisan Consumer will offset losses from the drop in Artisan Consumer's long position.

The idea behind China Mengniu Dairy and Artisan Consumer Goods 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.