Correlation Between CICC Fund and Kweichow Moutai

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

Diversification Opportunities for CICC Fund and Kweichow Moutai

-0.43

Correlation Coefficient

CICC Fund  Kweichow Moutai

Very good diversification

The 3 months correlation between CICC and Kweichow is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai 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 Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of CICC Fund i.e., CICC Fund and Kweichow Moutai go up and down completely randomly.

Pair Corralation between CICC Fund and Kweichow Moutai

Assuming the 90 days trading horizon CICC Fund is expected to generate 2.24 times less return on investment than Kweichow Moutai. But when comparing it to its historical volatility, CICC Fund Management is 2.68 times less risky than Kweichow Moutai. It trades about 0.13 of its potential returns per unit of risk. Kweichow Moutai Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  133,506  in Kweichow Moutai Co on September 12, 2024 and sell it today you would earn a total of  21,153  from holding Kweichow Moutai Co or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

CICC Fund Management  vs.  Kweichow Moutai Co

CICC Fund Management

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CICC Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kweichow Moutai

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kweichow Moutai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CICC Fund and Kweichow Moutai

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

The idea behind CICC Fund Management and Kweichow Moutai Co 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.

Check out your portfolio center.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.