Correlation Between CICC Fund and Industrial Bank

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

Diversification Opportunities for CICC Fund and Industrial Bank

0.71

Correlation Coefficient

CICC Fund  Industrial Bank

Poor diversification

The 3 months correlation between CICC and Industrial is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of CICC Fund i.e., CICC Fund and Industrial Bank go up and down completely randomly.

Pair Corralation between CICC Fund and Industrial Bank

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.88 times more return on investment than Industrial Bank. However, CICC Fund Management is 1.14 times less risky than Industrial Bank. It trades about 0.31 of its potential returns per unit of risk. Industrial Bank Co is currently generating about 0.08 per unit of risk. If you would invest  314.00  in CICC Fund Management on October 26, 2024 and sell it today you would earn a total of  76.00  from holding CICC Fund Management or generate 24.2% return on investment over 90 days.

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

CICC Fund Management  vs.  Industrial Bank Co

CICC Fund Management

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 24 (%) 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.

Industrial Bank

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CICC Fund and Industrial Bank

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

The idea behind CICC Fund Management and Industrial Bank 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.