Correlation Between COFCO Joycome and CN MODERN

Can any of the company-specific risk be diversified away by investing in both COFCO Joycome and CN MODERN 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 COFCO Joycome and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COFCO Joycome Foods and CN MODERN DAIRY, you can compare the effects of market volatilities on COFCO Joycome and CN MODERN 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 COFCO Joycome with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and CN MODERN.

Diversification Opportunities for COFCO Joycome and CN MODERN

0.19

Correlation Coefficient

COFCO Joycome  CN MODERN

Average diversification

The 3 months correlation between COFCO and 07M is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and COFCO Joycome 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 COFCO Joycome Foods are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of COFCO Joycome i.e., COFCO Joycome and CN MODERN go up and down completely randomly.

Pair Corralation between COFCO Joycome and CN MODERN

Assuming the 90 days horizon COFCO Joycome Foods is expected to under-perform the CN MODERN. But the stock apears to be less risky and, when comparing its historical volatility, COFCO Joycome Foods is 1.1 times less risky than CN MODERN. The stock trades about -0.02 of its potential returns per unit of risk. The CN MODERN DAIRY is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.55  in CN MODERN DAIRY on October 6, 2024 and sell it today you would earn a total of  0.45  from holding CN MODERN DAIRY or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

COFCO Joycome Foods  vs.  CN MODERN DAIRY

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CN MODERN DAIRY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CN MODERN DAIRY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, CN MODERN is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with COFCO Joycome and CN MODERN

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

The idea behind COFCO Joycome Foods and CN MODERN DAIRY 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.