Correlation Between CICC Fund and China Asset

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

Diversification Opportunities for CICC Fund and China Asset

0.97

Correlation Coefficient

CICC Fund  China Asset

Almost no diversification

The 3 months correlation between CICC and China is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and China Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Asset Management 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 China Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Asset Management has no effect on the direction of CICC Fund i.e., CICC Fund and China Asset go up and down completely randomly.

Pair Corralation between CICC Fund and China Asset

Assuming the 90 days trading horizon CICC Fund is expected to generate 1.03 times less return on investment than China Asset. But when comparing it to its historical volatility, CICC Fund Management is 1.02 times less risky than China Asset. It trades about 0.08 of its potential returns per unit of risk. China Asset Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  265.00  in China Asset Management on September 28, 2024 and sell it today you would earn a total of  90.00  from holding China Asset Management or generate 33.96% return on investment over 90 days.

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

CICC Fund Management  vs.  China Asset Management

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.

China Asset Management

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Asset Management are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CICC Fund and China Asset

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

The idea behind CICC Fund Management and China Asset Management 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.