Correlation Between AVIC Fund and Guangdong Jingyi

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

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

Diversification Opportunities for AVIC Fund and Guangdong Jingyi

0.43

Correlation Coefficient

AVIC Fund  Guangdong Jingyi

Very weak diversification

The 3 months correlation between AVIC and Guangdong is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal and AVIC 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 AVIC Fund Management are associated (or correlated) with Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of AVIC Fund i.e., AVIC Fund and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between AVIC Fund and Guangdong Jingyi

Assuming the 90 days trading horizon AVIC Fund is expected to generate 300.48 times less return on investment than Guangdong Jingyi. But when comparing it to its historical volatility, AVIC Fund Management is 8.58 times less risky than Guangdong Jingyi. It trades about 0.01 of its potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Guangdong Jingyi Metal on August 31, 2024 and sell it today you would earn a total of  226.00  from holding Guangdong Jingyi Metal or generate 44.75% return on investment over 90 days.

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

AVIC Fund Management  vs.  Guangdong Jingyi Metal

AVIC Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guangdong Jingyi Metal

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVIC Fund and Guangdong Jingyi

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

The idea behind AVIC Fund Management and Guangdong Jingyi Metal 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.