Correlation Between Huaxia Fund and Bank of Suzhou

Can any of the company-specific risk be diversified away by investing in both Huaxia Fund and Bank of Suzhou 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 Huaxia Fund and Bank of Suzhou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huaxia Fund Management and Bank of Suzhou, you can compare the effects of market volatilities on Huaxia Fund and Bank of Suzhou 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 Huaxia Fund with a short position of Bank of Suzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaxia Fund and Bank of Suzhou.

Diversification Opportunities for Huaxia Fund and Bank of Suzhou

0.04

Correlation Coefficient

Huaxia Fund  Bank of Suzhou

Significant diversification

The 3 months correlation between Huaxia and Bank is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Huaxia Fund Management and Bank of Suzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Suzhou and Huaxia 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 Huaxia Fund Management are associated (or correlated) with Bank of Suzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Suzhou has no effect on the direction of Huaxia Fund i.e., Huaxia Fund and Bank of Suzhou go up and down completely randomly.

Pair Corralation between Huaxia Fund and Bank of Suzhou

Assuming the 90 days trading horizon Huaxia Fund Management is expected to generate 1.37 times more return on investment than Bank of Suzhou. However, Huaxia Fund is 1.37 times more volatile than Bank of Suzhou. It trades about 0.29 of its potential returns per unit of risk. Bank of Suzhou is currently generating about 0.01 per unit of risk. If you would invest  259.00  in Huaxia Fund Management on September 22, 2024 and sell it today you would earn a total of  24.00  from holding Huaxia Fund Management or generate 9.27% return on investment over 90 days.

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

Huaxia Fund Management  vs.  Bank of Suzhou

Huaxia Fund Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huaxia Fund Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huaxia Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank of Suzhou

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Suzhou are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank of Suzhou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huaxia Fund and Bank of Suzhou

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

The idea behind Huaxia Fund Management and Bank of Suzhou 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..