Correlation Between CICC Fund and Shanghai Yanpu

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

Diversification Opportunities for CICC Fund and Shanghai Yanpu

0.25

Correlation Coefficient

CICC Fund  Shanghai Yanpu

Modest diversification

The 3 months correlation between CICC and Shanghai is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Shanghai Yanpu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yanpu Metal 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 Shanghai Yanpu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yanpu Metal has no effect on the direction of CICC Fund i.e., CICC Fund and Shanghai Yanpu go up and down completely randomly.

Pair Corralation between CICC Fund and Shanghai Yanpu

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.29 times more return on investment than Shanghai Yanpu. However, CICC Fund Management is 3.45 times less risky than Shanghai Yanpu. It trades about 0.08 of its potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about 0.01 per unit of risk. If you would invest  268.00  in CICC Fund Management on October 4, 2024 and sell it today you would earn a total of  100.00  from holding CICC Fund Management or generate 37.31% return on investment over 90 days.

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

CICC Fund Management  vs.  Shanghai Yanpu Metal

CICC Fund Management

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CICC Fund Management are ranked lower than 17 (%) 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.

Shanghai Yanpu Metal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Yanpu Metal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Yanpu 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 Shanghai Yanpu

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

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