Correlation Between Vanfund Urban and China Northern

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

By analyzing existing cross correlation between Vanfund Urban Investment and China Northern Rare, you can compare the effects of market volatilities on Vanfund Urban and China Northern 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 Vanfund Urban with a short position of China Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanfund Urban and China Northern.

Diversification Opportunities for Vanfund Urban and China Northern

0.61

Correlation Coefficient

Vanfund Urban  China Northern

Poor diversification

The 3 months correlation between Vanfund and China is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment and China Northern Rare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Northern Rare and Vanfund Urban 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 Vanfund Urban Investment are associated (or correlated) with China Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Northern Rare has no effect on the direction of Vanfund Urban i.e., Vanfund Urban and China Northern go up and down completely randomly.

Pair Corralation between Vanfund Urban and China Northern

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to generate 1.08 times more return on investment than China Northern. However, Vanfund Urban is 1.08 times more volatile than China Northern Rare. It trades about 0.28 of its potential returns per unit of risk. China Northern Rare is currently generating about 0.2 per unit of risk. If you would invest  359.00  in Vanfund Urban Investment on September 14, 2024 and sell it today you would earn a total of  264.00  from holding Vanfund Urban Investment or generate 73.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Vanfund Urban Investment  vs.  China Northern Rare

Vanfund Urban Investment

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanfund Urban Investment are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanfund Urban sustained solid returns over the last few months and may actually be approaching a breakup point.

China Northern Rare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Northern Rare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Northern sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanfund Urban and China Northern

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

The idea behind Vanfund Urban Investment and China Northern Rare 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.