Correlation Between AVIC Fund and China International

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

Diversification Opportunities for AVIC Fund and China International

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between AVIC and China is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and China International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of AVIC Fund i.e., AVIC Fund and China International go up and down completely randomly.

Pair Corralation between AVIC Fund and China International

Assuming the 90 days trading horizon AVIC Fund is expected to generate 218.57 times less return on investment than China International. But when comparing it to its historical volatility, AVIC Fund Management is 11.56 times less risky than China International. It trades about 0.01 of its potential returns per unit of risk. China International Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,736  in China International Capital on August 31, 2024 and sell it today you would earn a total of  759.00  from holding China International Capital or generate 27.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AVIC Fund Management  vs.  China International Capital

 Performance 
       Timeline  
AVIC Fund Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
China International 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in China International Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China International sustained solid returns over the last few months and may actually be approaching a breakup point.

AVIC Fund and China International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AVIC Fund and China International

The main advantage of trading using opposite AVIC Fund and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIC Fund position performs unexpectedly, China International 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 China International will offset losses from the drop in China International's long position.
The idea behind AVIC Fund Management and China International Capital 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.
Check out your portfolio center.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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