Correlation Between China Securities and Cicc Fund

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

By analyzing existing cross correlation between China Securities 800 and Cicc Fund Management, you can compare the effects of market volatilities on China Securities 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 China Securities with a short position of Cicc Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Cicc Fund.

Diversification Opportunities for China Securities and Cicc Fund

-0.2

Correlation Coefficient

China Securities  Cicc Fund

Good diversification

The 3 months correlation between China and Cicc is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 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 China Securities 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 China Securities 800 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 China Securities i.e., China Securities and Cicc Fund go up and down completely randomly.

Pair Corralation between China Securities and Cicc Fund

Assuming the 90 days trading horizon China Securities 800 is expected to under-perform the Cicc Fund. In addition to that, China Securities is 1.01 times more volatile than Cicc Fund Management. It trades about -0.02 of its total potential returns per unit of risk. Cicc Fund Management is currently generating about 0.22 per unit of volatility. If you would invest  221.00  in Cicc Fund Management on December 1, 2024 and sell it today you would earn a total of  30.00  from holding Cicc Fund Management or generate 13.57% return on investment over 90 days.

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

China Securities 800  vs.  Cicc Fund Management

Pair Trading with China Securities and Cicc Fund

The main advantage of trading using opposite China Securities and Cicc Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities 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 China Securities 800 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.