Correlation Between Shengda Mining and Cicc Fund

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

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

Diversification Opportunities for Shengda Mining and Cicc Fund

0.66

Correlation Coefficient

Shengda Mining  Cicc Fund

Poor diversification

The 3 months correlation between Shengda and Cicc is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and Cicc Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cicc Fund Management and Shengda Mining 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 Shengda Mining Co are associated (or correlated) with Cicc Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cicc Fund Management has no effect on the direction of Shengda Mining i.e., Shengda Mining and Cicc Fund go up and down completely randomly.

Pair Corralation between Shengda Mining and Cicc Fund

Assuming the 90 days trading horizon Shengda Mining Co is expected to generate 2.08 times more return on investment than Cicc Fund. However, Shengda Mining is 2.08 times more volatile than Cicc Fund Management. It trades about 0.23 of its potential returns per unit of risk. Cicc Fund Management is currently generating about 0.17 per unit of risk. If you would invest  1,227  in Shengda Mining Co on December 30, 2024 and sell it today you would earn a total of  365.00  from holding Shengda Mining Co or generate 29.75% return on investment over 90 days.

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

Shengda Mining Co  vs.  Cicc Fund Management

Shengda Mining

Risk-Adjusted Performance

Solid

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

Cicc Fund Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cicc Fund Management are ranked lower than 13 (%) 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 April 2025.

Pair Trading with Shengda Mining and Cicc Fund

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

The idea behind Shengda Mining Co and Cicc 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.