Correlation Between CICC Fund and Shanghai Yaoji

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

Diversification Opportunities for CICC Fund and Shanghai Yaoji

-0.32

Correlation Coefficient

CICC Fund  Shanghai Yaoji

Very good diversification

The 3 months correlation between CICC and Shanghai is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Shanghai Yaoji Playing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yaoji Playing 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 Shanghai Yaoji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yaoji Playing has no effect on the direction of CICC Fund i.e., CICC Fund and Shanghai Yaoji go up and down completely randomly.

Pair Corralation between CICC Fund and Shanghai Yaoji

Assuming the 90 days trading horizon CICC Fund is expected to generate 295.9 times less return on investment than Shanghai Yaoji. But when comparing it to its historical volatility, CICC Fund Management is 5.7 times less risky than Shanghai Yaoji. It trades about 0.0 of its potential returns per unit of risk. Shanghai Yaoji Playing is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,003  in Shanghai Yaoji Playing on September 4, 2024 and sell it today you would earn a total of  1,159  from holding Shanghai Yaoji Playing or generate 57.86% return on investment over 90 days.

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

CICC Fund Management  vs.  Shanghai Yaoji Playing

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.

Shanghai Yaoji Playing

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with CICC Fund and Shanghai Yaoji

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

The idea behind CICC Fund Management and Shanghai Yaoji Playing 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.