Correlation Between 00108WAF7 and China Mengniu

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 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 00108WAF7 and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and China Mengniu Dairy, you can compare the effects of market volatilities on 00108WAF7 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 00108WAF7 with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and China Mengniu.

Diversification Opportunities for 00108WAF7 and China Mengniu

0.73

Correlation Coefficient

00108WAF7  China Mengniu

Poor diversification

The 3 months correlation between 00108WAF7 and China is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC 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 00108WAF7 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 AEP TEX INC 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 00108WAF7 i.e., 00108WAF7 and China Mengniu go up and down completely randomly.

Pair Corralation between 00108WAF7 and China Mengniu

Assuming the 90 days trading horizon AEP TEX INC is expected to under-perform the China Mengniu. But the bond apears to be less risky and, when comparing its historical volatility, AEP TEX INC is 3.11 times less risky than China Mengniu. The bond trades about -0.01 of its potential returns per unit of risk. The China Mengniu Dairy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,144  in China Mengniu Dairy on November 29, 2024 and sell it today you would earn a total of  132.00  from holding China Mengniu Dairy or generate 6.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	72.88%
Values	Daily Returns

AEP TEX INC  vs.  China Mengniu Dairy

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

China Mengniu Dairy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Mengniu Dairy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, China Mengniu may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with 00108WAF7 and China Mengniu

The main advantage of trading using opposite 00108WAF7 and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 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 AEP TEX INC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.