Correlation Between CICC Fund and Kuang Chi

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

Diversification Opportunities for CICC Fund and Kuang Chi

-0.26

Correlation Coefficient

CICC Fund  Kuang Chi

Very good diversification

The 3 months correlation between CICC and Kuang is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Kuang Chi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuang Chi Technologies 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 Kuang Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuang Chi Technologies has no effect on the direction of CICC Fund i.e., CICC Fund and Kuang Chi go up and down completely randomly.

Pair Corralation between CICC Fund and Kuang Chi

Assuming the 90 days trading horizon CICC Fund is expected to generate 11.63 times less return on investment than Kuang Chi. But when comparing it to its historical volatility, CICC Fund Management is 4.78 times less risky than Kuang Chi. It trades about 0.13 of its potential returns per unit of risk. Kuang Chi Technologies is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Kuang Chi Technologies on September 13, 2024 and sell it today you would earn a total of  2,408  from holding Kuang Chi Technologies or generate 129.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

CICC Fund Management  vs.  Kuang Chi Technologies

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.

Kuang Chi Technologies

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kuang Chi Technologies are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuang Chi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Kuang Chi

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

The idea behind CICC Fund Management and Kuang Chi Technologies 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.