Correlation Between Cicc Fund and TongFu Microelectronics

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

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

Diversification Opportunities for Cicc Fund and TongFu Microelectronics

-0.07

Correlation Coefficient

Cicc Fund  TongFu Microelectronics

Good diversification

The 3 months correlation between Cicc and TongFu is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cicc Fund Management and TongFu Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TongFu Microelectronics and Cicc Fund 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 Cicc Fund Management are associated (or correlated) with TongFu Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TongFu Microelectronics has no effect on the direction of Cicc Fund i.e., Cicc Fund and TongFu Microelectronics go up and down completely randomly.

Pair Corralation between Cicc Fund and TongFu Microelectronics

Assuming the 90 days trading horizon Cicc Fund Management is expected to generate 0.42 times more return on investment than TongFu Microelectronics. However, Cicc Fund Management is 2.37 times less risky than TongFu Microelectronics. It trades about 0.09 of its potential returns per unit of risk. TongFu Microelectronics Co is currently generating about -0.02 per unit of risk. If you would invest  246.00  in Cicc Fund Management on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Cicc Fund Management or generate 2.03% return on investment over 90 days.

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

Cicc Fund Management  vs.  TongFu Microelectronics Co

Cicc Fund Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cicc Fund Management are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cicc Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

TongFu Microelectronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days TongFu Microelectronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cicc Fund and TongFu Microelectronics

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

The idea behind Cicc Fund Management and TongFu Microelectronics Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.