Correlation Between AVIC Fund and Shanghai CEO

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

Diversification Opportunities for AVIC Fund and Shanghai CEO

0.47

Correlation Coefficient

AVIC Fund  Shanghai CEO

Very weak diversification

The 3 months correlation between AVIC and Shanghai is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Shanghai CEO Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai CEO Environ 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 Shanghai CEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai CEO Environ has no effect on the direction of AVIC Fund i.e., AVIC Fund and Shanghai CEO go up and down completely randomly.

Pair Corralation between AVIC Fund and Shanghai CEO

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.19 times more return on investment than Shanghai CEO. However, AVIC Fund Management is 5.39 times less risky than Shanghai CEO. It trades about 0.45 of its potential returns per unit of risk. Shanghai CEO Environmental is currently generating about -0.19 per unit of risk. If you would invest  1,006  in AVIC Fund Management on September 25, 2024 and sell it today you would earn a total of  44.00  from holding AVIC Fund Management or generate 4.37% 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.  Shanghai CEO Environmental

AVIC Fund Management

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shanghai CEO Environ

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai CEO Environmental are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai CEO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVIC Fund and Shanghai CEO

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

The idea behind AVIC Fund Management and Shanghai CEO Environmental 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.