Correlation Between Vanfund Urban and China Aluminum

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

Diversification Opportunities for Vanfund Urban and China Aluminum

0.87

Correlation Coefficient

Vanfund Urban  China Aluminum

Very poor diversification

The 3 months correlation between Vanfund and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment and China Aluminum International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aluminum Inter 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 China Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aluminum Inter has no effect on the direction of Vanfund Urban i.e., Vanfund Urban and China Aluminum go up and down completely randomly.

Pair Corralation between Vanfund Urban and China Aluminum

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to generate 2.01 times more return on investment than China Aluminum. However, Vanfund Urban is 2.01 times more volatile than China Aluminum International. It trades about -0.02 of its potential returns per unit of risk. China Aluminum International is currently generating about -0.15 per unit of risk. If you would invest  512.00  in Vanfund Urban Investment on October 27, 2024 and sell it today you would lose (37.00) from holding Vanfund Urban Investment or give up 7.23% of portfolio value over 90 days.

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

Vanfund Urban Investment  vs.  China Aluminum International

Vanfund Urban Investment

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Vanfund Urban is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Aluminum Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Aluminum International 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vanfund Urban and China Aluminum

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

The idea behind Vanfund Urban Investment and China Aluminum International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..