Correlation Between CICC Fund and Shandong Homey

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

Diversification Opportunities for CICC Fund and Shandong Homey

-0.18

Correlation Coefficient

CICC Fund  Shandong Homey

Good diversification

The 3 months correlation between CICC and Shandong is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Shandong Homey Aquatic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Homey Aquatic 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 Shandong Homey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Homey Aquatic has no effect on the direction of CICC Fund i.e., CICC Fund and Shandong Homey go up and down completely randomly.

Pair Corralation between CICC Fund and Shandong Homey

Assuming the 90 days trading horizon CICC Fund is expected to generate 2.04 times less return on investment than Shandong Homey. But when comparing it to its historical volatility, CICC Fund Management is 3.69 times less risky than Shandong Homey. It trades about 0.11 of its potential returns per unit of risk. Shandong Homey Aquatic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Shandong Homey Aquatic on December 25, 2024 and sell it today you would earn a total of  21.00  from holding Shandong Homey Aquatic or generate 8.97% return on investment over 90 days.

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

CICC Fund Management  vs.  Shandong Homey Aquatic

CICC Fund Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CICC Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shandong Homey Aquatic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Homey Aquatic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Homey may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CICC Fund and Shandong Homey

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

The idea behind CICC Fund Management and Shandong Homey Aquatic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.