Correlation Between CICC Fund and Western Metal

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

Diversification Opportunities for CICC Fund and Western Metal

0.45

Correlation Coefficient

CICC Fund  Western Metal

Very weak diversification

The 3 months correlation between CICC and Western is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials 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 Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of CICC Fund i.e., CICC Fund and Western Metal go up and down completely randomly.

Pair Corralation between CICC Fund and Western Metal

Assuming the 90 days trading horizon CICC Fund is expected to generate 1.0 times less return on investment than Western Metal. But when comparing it to its historical volatility, CICC Fund Management is 3.05 times less risky than Western Metal. It trades about 0.08 of its potential returns per unit of risk. Western Metal Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,475  in Western Metal Materials on October 4, 2024 and sell it today you would earn a total of  295.00  from holding Western Metal Materials or generate 20.0% return on investment over 90 days.

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

CICC Fund Management  vs.  Western Metal Materials

CICC Fund Management

Risk-Adjusted Performance

17 of 100

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.

Western Metal Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Metal Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Western Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Western Metal

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

The idea behind CICC Fund Management and Western Metal Materials 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.