Correlation Between CICC Fund and Guangzhou Dongfang

Can any of the company-specific risk be diversified away by investing in both CICC Fund and Guangzhou Dongfang 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 Guangzhou Dongfang 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 Guangzhou Dongfang Hotel, you can compare the effects of market volatilities on CICC Fund and Guangzhou Dongfang 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 Guangzhou Dongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of CICC Fund and Guangzhou Dongfang.

Diversification Opportunities for CICC Fund and Guangzhou Dongfang

-0.35

Correlation Coefficient

CICC Fund  Guangzhou Dongfang

Very good diversification

The 3 months correlation between CICC and Guangzhou is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Guangzhou Dongfang Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Dongfang Hotel 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 Guangzhou Dongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Dongfang Hotel has no effect on the direction of CICC Fund i.e., CICC Fund and Guangzhou Dongfang go up and down completely randomly.

Pair Corralation between CICC Fund and Guangzhou Dongfang

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.29 times more return on investment than Guangzhou Dongfang. However, CICC Fund Management is 3.47 times less risky than Guangzhou Dongfang. It trades about 0.09 of its potential returns per unit of risk. Guangzhou Dongfang Hotel is currently generating about 0.0 per unit of risk. If you would invest  281.00  in CICC Fund Management on October 25, 2024 and sell it today you would earn a total of  111.00  from holding CICC Fund Management or generate 39.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

CICC Fund Management  vs.  Guangzhou Dongfang Hotel

CICC Fund Management

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 25 (%) 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.

Guangzhou Dongfang Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Dongfang Hotel 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 Guangzhou Dongfang

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

The idea behind CICC Fund Management and Guangzhou Dongfang Hotel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.