Correlation Between Vanfund Urban and Huaxia Fund

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

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

Diversification Opportunities for Vanfund Urban and Huaxia Fund

-0.64

Correlation Coefficient

Vanfund Urban  Huaxia Fund

Excellent diversification

The 3 months correlation between Vanfund and Huaxia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment 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 Vanfund Urban 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 Vanfund Urban Investment 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 Vanfund Urban i.e., Vanfund Urban and Huaxia Fund go up and down completely randomly.

Pair Corralation between Vanfund Urban and Huaxia Fund

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to under-perform the Huaxia Fund. In addition to that, Vanfund Urban is 3.48 times more volatile than Huaxia Fund Management. It trades about 0.0 of its total potential returns per unit of risk. Huaxia Fund Management is currently generating about 0.09 per unit of volatility. If you would invest  233.00  in Huaxia Fund Management on December 3, 2024 and sell it today you would earn a total of  78.00  from holding Huaxia Fund Management or generate 33.48% return on investment over 90 days.

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

Vanfund Urban Investment  vs.  Huaxia Fund Management

Vanfund Urban Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanfund Urban Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Huaxia Fund Management

Risk-Adjusted Performance

Solid

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

Pair Trading with Vanfund Urban and Huaxia Fund

The main advantage of trading using opposite Vanfund Urban and Huaxia Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanfund Urban 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 Vanfund Urban Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.