Correlation Between China Mengniu and Conagra Brands

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

Diversification Opportunities for China Mengniu and Conagra Brands

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between China and Conagra is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Conagra Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conagra Brands 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 Conagra Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conagra Brands has no effect on the direction of China Mengniu i.e., China Mengniu and Conagra Brands go up and down completely randomly.

Pair Corralation between China Mengniu and Conagra Brands

Assuming the 90 days horizon China Mengniu Dairy is expected to generate 1.15 times more return on investment than Conagra Brands. However, China Mengniu is 1.15 times more volatile than Conagra Brands. It trades about 0.0 of its potential returns per unit of risk. Conagra Brands is currently generating about 0.0 per unit of risk. If you would invest  451.00  in China Mengniu Dairy on June 30, 2022 and sell it today you would lose (31.00)  from holding China Mengniu Dairy or give up 6.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

China Mengniu Dairy  vs.  Conagra Brands

 Performance (%) 
       Timeline  
China Mengniu Dairy 
China Performance
0 of 100
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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

China Price Channel

Conagra Brands 
Conagra Performance
0 of 100
Over the last 90 days Conagra Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Conagra Brands is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Conagra Price Channel

China Mengniu and Conagra Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Mengniu and Conagra Brands

The main advantage of trading using opposite China Mengniu and Conagra Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Conagra Brands 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 Conagra Brands will offset losses from the drop in Conagra Brands' long position.
China Mengniu vs. Kibush Capital Corp
The idea behind China Mengniu Dairy and Conagra Brands 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.
Conagra Brands vs. Kibush Capital Corp
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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