Correlation Between CICC Fund and Zhejiang Construction

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

Diversification Opportunities for CICC Fund and Zhejiang Construction

0.21

Correlation Coefficient

CICC Fund  Zhejiang Construction

Modest diversification

The 3 months correlation between CICC and Zhejiang is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Zhejiang Construction Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Construction 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 Zhejiang Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Construction has no effect on the direction of CICC Fund i.e., CICC Fund and Zhejiang Construction go up and down completely randomly.

Pair Corralation between CICC Fund and Zhejiang Construction

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.28 times more return on investment than Zhejiang Construction. However, CICC Fund Management is 3.54 times less risky than Zhejiang Construction. It trades about 0.38 of its potential returns per unit of risk. Zhejiang Construction Investment is currently generating about 0.04 per unit of risk. If you would invest  322.00  in CICC Fund Management on September 19, 2024 and sell it today you would earn a total of  43.00  from holding CICC Fund Management or generate 13.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

CICC Fund Management  vs.  Zhejiang Construction Investme

CICC Fund Management

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 13 (%) 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.

Zhejiang Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Construction Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Zhejiang Construction

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

The idea behind CICC Fund Management and Zhejiang Construction Investment 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 Correlations module to find global opportunities by holding instruments from different markets.