Correlation Between China Mengniu and Chicago Atlantic

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

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

Diversification Opportunities for China Mengniu and Chicago Atlantic

-0.31

Correlation Coefficient

China Mengniu  Chicago Atlantic

Very good diversification

The 3 months correlation between China and Chicago is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Chicago Atlantic BDC, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Atlantic BDC, and China Mengniu 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 Mengniu Dairy are associated (or correlated) with Chicago Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Atlantic BDC, has no effect on the direction of China Mengniu i.e., China Mengniu and Chicago Atlantic go up and down completely randomly.

Pair Corralation between China Mengniu and Chicago Atlantic

Assuming the 90 days horizon China Mengniu Dairy is expected to generate 3.11 times more return on investment than Chicago Atlantic. However, China Mengniu is 3.11 times more volatile than Chicago Atlantic BDC,. It trades about 0.0 of its potential returns per unit of risk. Chicago Atlantic BDC, is currently generating about -0.16 per unit of risk. If you would invest  2,256  in China Mengniu Dairy on October 1, 2024 and sell it today you would lose (26.00) from holding China Mengniu Dairy or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

China Mengniu Dairy  vs.  Chicago Atlantic BDC,

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

Chicago Atlantic BDC,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic BDC, are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Chicago Atlantic displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Mengniu and Chicago Atlantic

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

The idea behind China Mengniu Dairy and Chicago Atlantic BDC, 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.