Correlation Between Kweichow Moutai and JuneYao Dairy

Can any of the company-specific risk be diversified away by investing in both Kweichow Moutai and JuneYao Dairy 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 Kweichow Moutai and JuneYao Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kweichow Moutai Co and JuneYao Dairy Co, you can compare the effects of market volatilities on Kweichow Moutai and JuneYao Dairy 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 Kweichow Moutai with a short position of JuneYao Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and JuneYao Dairy.

Diversification Opportunities for Kweichow Moutai and JuneYao Dairy

-0.14

Correlation Coefficient

Kweichow Moutai  JuneYao Dairy

Good diversification

The 3 months correlation between Kweichow and JuneYao is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and JuneYao Dairy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JuneYao Dairy and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with JuneYao Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JuneYao Dairy has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and JuneYao Dairy go up and down completely randomly.

Pair Corralation between Kweichow Moutai and JuneYao Dairy

Assuming the 90 days trading horizon Kweichow Moutai Co is expected to generate 0.51 times more return on investment than JuneYao Dairy. However, Kweichow Moutai Co is 1.95 times less risky than JuneYao Dairy. It trades about -0.03 of its potential returns per unit of risk. JuneYao Dairy Co is currently generating about -0.06 per unit of risk. If you would invest  177,850  in Kweichow Moutai Co on October 5, 2024 and sell it today you would lose (30,350) from holding Kweichow Moutai Co or give up 17.06% of portfolio value over 90 days.

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

Kweichow Moutai Co  vs.  JuneYao Dairy Co

Kweichow Moutai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kweichow Moutai Co 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JuneYao Dairy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JuneYao Dairy Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JuneYao Dairy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kweichow Moutai and JuneYao Dairy

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

The idea behind Kweichow Moutai Co and JuneYao Dairy Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..