Correlation Between CICC Fund and Shandong Huifa

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

Diversification Opportunities for CICC Fund and Shandong Huifa

0.0

Correlation Coefficient

CICC Fund  Shandong Huifa

Pay attention - limited upside

The 3 months correlation between CICC and Shandong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Shandong Huifa Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Huifa Foodstuff 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 Huifa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Huifa Foodstuff has no effect on the direction of CICC Fund i.e., CICC Fund and Shandong Huifa go up and down completely randomly.

Pair Corralation between CICC Fund and Shandong Huifa

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.25 times more return on investment than Shandong Huifa. However, CICC Fund Management is 4.05 times less risky than Shandong Huifa. It trades about 0.11 of its potential returns per unit of risk. Shandong Huifa Foodstuff is currently generating about -0.1 per unit of risk. If you would invest  365.00  in CICC Fund Management on December 25, 2024 and sell it today you would earn a total of  20.00  from holding CICC Fund Management or generate 5.48% return on investment over 90 days.

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

CICC Fund Management  vs.  Shandong Huifa Foodstuff

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 Huifa Foodstuff

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Huifa Foodstuff has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CICC Fund and Shandong Huifa

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

The idea behind CICC Fund Management and Shandong Huifa Foodstuff 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.