Correlation Between BKV and China Mengniu
Can any of the company-specific risk be diversified away by investing in both BKV 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 BKV and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKV Corporation and China Mengniu Dairy, you can compare the effects of market volatilities on BKV 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 BKV with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and China Mengniu.
Diversification Opportunities for BKV and China Mengniu
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKV and China is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. 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 BKV 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 BKV Corporation 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 BKV i.e., BKV and China Mengniu go up and down completely randomly.
Pair Corralation between BKV and China Mengniu
Considering the 90-day investment horizon BKV Corporation is expected to generate 0.42 times more return on investment than China Mengniu. However, BKV Corporation is 2.39 times less risky than China Mengniu. It trades about 0.19 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about 0.06 per unit of risk. If you would invest 1,800 in BKV Corporation on September 25, 2024 and sell it today you would earn a total of 423.50 from holding BKV Corporation or generate 23.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 50.4% |
Values | Daily Returns |
BKV Corp. vs. China Mengniu Dairy
Performance |
Timeline |
BKV Corporation |
China Mengniu Dairy |
BKV and China Mengniu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BKV and China Mengniu
The main advantage of trading using opposite BKV and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV 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.BKV vs. Antero Resources Corp | BKV vs. Empire Petroleum Corp | BKV vs. Permian Resources | BKV vs. SandRidge Energy |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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