Correlation Between CICC Fund and Maoming Petro

Can any of the company-specific risk be diversified away by investing in both CICC Fund and Maoming Petro 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 Maoming Petro 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 Maoming Petro Chemical Shihua, you can compare the effects of market volatilities on CICC Fund and Maoming Petro 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 Maoming Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CICC Fund and Maoming Petro.

Diversification Opportunities for CICC Fund and Maoming Petro

0.23

Correlation Coefficient

CICC Fund  Maoming Petro

Modest diversification

The 3 months correlation between CICC and Maoming is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Maoming Petro Chemical Shihua in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maoming Petro Chemical 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 Maoming Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maoming Petro Chemical has no effect on the direction of CICC Fund i.e., CICC Fund and Maoming Petro go up and down completely randomly.

Pair Corralation between CICC Fund and Maoming Petro

Assuming the 90 days trading horizon CICC Fund is expected to generate 4.66 times less return on investment than Maoming Petro. But when comparing it to its historical volatility, CICC Fund Management is 2.65 times less risky than Maoming Petro. It trades about 0.13 of its potential returns per unit of risk. Maoming Petro Chemical Shihua is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Maoming Petro Chemical Shihua on September 15, 2024 and sell it today you would earn a total of  121.00  from holding Maoming Petro Chemical Shihua or generate 39.8% return on investment over 90 days.

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

CICC Fund Management  vs.  Maoming Petro Chemical Shihua

CICC Fund Management

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CICC Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Maoming Petro Chemical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maoming Petro Chemical Shihua are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maoming Petro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Maoming Petro

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

The idea behind CICC Fund Management and Maoming Petro Chemical Shihua 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.