Correlation Between China Foods and ServiceNow

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

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

Diversification Opportunities for China Foods and ServiceNow

0.0

Correlation Coefficient

China Foods  ServiceNow

Pay attention - limited upside

The 3 months correlation between China and ServiceNow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Foods Limited and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and China Foods 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 Foods Limited are associated (or correlated) with ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of China Foods i.e., China Foods and ServiceNow go up and down completely randomly.

Pair Corralation between China Foods and ServiceNow

If you would invest  1.17  in China Foods Limited on December 4, 2024 and sell it today you would earn a total of  0.00  from holding China Foods Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

China Foods Limited  vs.  ServiceNow

China Foods Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, China Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with China Foods and ServiceNow

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

The idea behind China Foods Limited and ServiceNow 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.