Correlation Between Aryzta AG and China Feihe

Can any of the company-specific risk be diversified away by investing in both Aryzta AG and China Feihe 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 Aryzta AG and China Feihe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aryzta AG PK and China Feihe Limited, you can compare the effects of market volatilities on Aryzta AG and China Feihe 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 Aryzta AG with a short position of China Feihe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and China Feihe.

Diversification Opportunities for Aryzta AG and China Feihe

-0.46

Correlation Coefficient

Aryzta AG  China Feihe

Very good diversification

The 3 months correlation between Aryzta and China is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and China Feihe Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Feihe Limited and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with China Feihe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Feihe Limited has no effect on the direction of Aryzta AG i.e., Aryzta AG and China Feihe go up and down completely randomly.

Pair Corralation between Aryzta AG and China Feihe

Assuming the 90 days horizon Aryzta AG PK is expected to under-perform the China Feihe. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aryzta AG PK is 5.32 times less risky than China Feihe. The pink sheet trades about -0.01 of its potential returns per unit of risk. The China Feihe Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  23.00  in China Feihe Limited on September 7, 2024 and sell it today you would earn a total of  47.00  from holding China Feihe Limited or generate 204.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aryzta AG PK  vs.  China Feihe Limited

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

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

China Feihe Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Feihe Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, China Feihe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aryzta AG and China Feihe

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

The idea behind Aryzta AG PK and China Feihe Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.