Correlation Between CICC Fund and Fujian Rongji

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

Diversification Opportunities for CICC Fund and Fujian Rongji

0.48

Correlation Coefficient

CICC Fund  Fujian Rongji

Very weak diversification

The 3 months correlation between CICC and Fujian is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Fujian Rongji Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Rongji Software 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 Fujian Rongji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Rongji Software has no effect on the direction of CICC Fund i.e., CICC Fund and Fujian Rongji go up and down completely randomly.

Pair Corralation between CICC Fund and Fujian Rongji

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.32 times more return on investment than Fujian Rongji. However, CICC Fund Management is 3.1 times less risky than Fujian Rongji. It trades about 0.41 of its potential returns per unit of risk. Fujian Rongji Software is currently generating about 0.13 per unit of risk. If you would invest  322.00  in CICC Fund Management on September 22, 2024 and sell it today you would earn a total of  46.00  from holding CICC Fund Management or generate 14.29% 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.  Fujian Rongji Software

CICC Fund Management

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 14 (%) 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.

Fujian Rongji Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Rongji Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Rongji sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Fujian Rongji

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

The idea behind CICC Fund Management and Fujian Rongji Software 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.