Correlation Between Bit Origin and China Mengniu

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

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

Diversification Opportunities for Bit Origin and China Mengniu

-0.22

Correlation Coefficient

Bit Origin  China Mengniu

Very good diversification

The 3 months correlation between Bit and China is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bit Origin and China Mengniu Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mengniu Dairy and Bit Origin 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 Bit Origin are associated (or correlated) with China Mengniu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mengniu Dairy has no effect on the direction of Bit Origin i.e., Bit Origin and China Mengniu go up and down completely randomly.

Pair Corralation between Bit Origin and China Mengniu

Given the investment horizon of 90 days Bit Origin is expected to generate 3.07 times more return on investment than China Mengniu. However, Bit Origin is 3.07 times more volatile than China Mengniu Dairy. It trades about 0.0 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about -0.04 per unit of risk. If you would invest  671.00  in Bit Origin on October 15, 2024 and sell it today you would lose (583.00) from holding Bit Origin or give up 86.89% of portfolio value over 90 days.

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

Bit Origin  vs.  China Mengniu Dairy

Bit Origin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bit Origin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bit Origin and China Mengniu

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

The idea behind Bit Origin and China Mengniu 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.