Correlation Between CICC Fund and Eastroc Beverage

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

Diversification Opportunities for CICC Fund and Eastroc Beverage

0.05

Correlation Coefficient

CICC Fund  Eastroc Beverage

Significant diversification

The 3 months correlation between CICC and Eastroc is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CICC Fund Management and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage 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 Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of CICC Fund i.e., CICC Fund and Eastroc Beverage go up and down completely randomly.

Pair Corralation between CICC Fund and Eastroc Beverage

Assuming the 90 days trading horizon CICC Fund Management is expected to generate 0.34 times more return on investment than Eastroc Beverage. However, CICC Fund Management is 2.98 times less risky than Eastroc Beverage. It trades about 0.11 of its potential returns per unit of risk. Eastroc Beverage Group is currently generating about -0.03 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	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

CICC Fund Management  vs.  Eastroc Beverage Group

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.

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastroc Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eastroc Beverage 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 Eastroc Beverage

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

The idea behind CICC Fund Management and Eastroc Beverage Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.