Correlation Between Cultural Investment and Huaxia Fund

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

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

Diversification Opportunities for Cultural Investment and Huaxia Fund

-0.54

Correlation Coefficient

Cultural Investment  Huaxia Fund

Excellent diversification

The 3 months correlation between Cultural and Huaxia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Huaxia Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaxia Fund Management and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Huaxia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaxia Fund Management has no effect on the direction of Cultural Investment i.e., Cultural Investment and Huaxia Fund go up and down completely randomly.

Pair Corralation between Cultural Investment and Huaxia Fund

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 3.56 times more return on investment than Huaxia Fund. However, Cultural Investment is 3.56 times more volatile than Huaxia Fund Management. It trades about 0.14 of its potential returns per unit of risk. Huaxia Fund Management is currently generating about -0.07 per unit of risk. If you would invest  180.00  in Cultural Investment Holdings on September 4, 2024 and sell it today you would earn a total of  45.00  from holding Cultural Investment Holdings or generate 25.0% return on investment over 90 days.

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

Cultural Investment Holdings  vs.  Huaxia Fund Management

Cultural Investment

Risk-Adjusted Performance

10 of 100

Good

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

Huaxia Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cultural Investment and Huaxia Fund

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

The idea behind Cultural Investment Holdings and Huaxia Fund Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.