Correlation Between China Mengniu and Strauss

Can any of the company-specific risk be diversified away by investing in both China Mengniu and Strauss 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 Strauss 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 Strauss Group, you can compare the effects of market volatilities on China Mengniu and Strauss 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 Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Strauss.

Diversification Opportunities for China Mengniu and Strauss

0.0

Correlation Coefficient

China Mengniu  Strauss

Pay attention - limited upside

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

Pair Corralation between China Mengniu and Strauss

If you would invest  2,183  in China Mengniu Dairy on December 29, 2024 and sell it today you would earn a total of  268.00  from holding China Mengniu Dairy or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	62.3%
Values	Daily Returns

China Mengniu Dairy  vs.  Strauss Group

China Mengniu Dairy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Mengniu Dairy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, China Mengniu showed solid returns over the last few months and may actually be approaching a breakup point.

Strauss Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with China Mengniu and Strauss

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

The idea behind China Mengniu Dairy and Strauss Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.