Correlation Between CICC Fund and Anhui Gujing

Can any of the company-specific risk be diversified away by investing in both CICC Fund and Anhui Gujing 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 CICC Fund and Anhui Gujing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CICC Fund Management and Anhui Gujing Distillery, you can compare the effects of market volatilities on CICC Fund and Anhui Gujing 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 CICC Fund with a short position of Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CICC Fund and Anhui Gujing.

Diversification Opportunities for CICC Fund and Anhui Gujing

-0.59

Correlation Coefficient

CICC Fund  Anhui Gujing

Excellent diversification

The 3 months correlation between CICC and Anhui is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery and CICC Fund 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 CICC Fund Management are associated (or correlated) with Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of CICC Fund i.e., CICC Fund and Anhui Gujing go up and down completely randomly.

Pair Corralation between CICC Fund and Anhui Gujing

Assuming the 90 days trading horizon CICC Fund is expected to generate 102.87 times less return on investment than Anhui Gujing. But when comparing it to its historical volatility, CICC Fund Management is 5.03 times less risky than Anhui Gujing. It trades about 0.0 of its potential returns per unit of risk. Anhui Gujing Distillery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16,660  in Anhui Gujing Distillery on September 4, 2024 and sell it today you would earn a total of  2,415  from holding Anhui Gujing Distillery or generate 14.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CICC Fund Management  vs.  Anhui Gujing Distillery

CICC Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Anhui Gujing Distillery

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Anhui Gujing

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

The idea behind CICC Fund Management and Anhui Gujing Distillery 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 Transaction History module to view history of all your transactions and understand their impact on performance.