Correlation Between AVIC Fund and Central Plains

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

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

Diversification Opportunities for AVIC Fund and Central Plains

-0.18

Correlation Coefficient

AVIC Fund  Central Plains

Good diversification

The 3 months correlation between AVIC and Central is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Central Plains Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plains Envir and AVIC 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 AVIC Fund Management are associated (or correlated) with Central Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plains Envir has no effect on the direction of AVIC Fund i.e., AVIC Fund and Central Plains go up and down completely randomly.

Pair Corralation between AVIC Fund and Central Plains

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.79 times more return on investment than Central Plains. However, AVIC Fund Management is 1.27 times less risky than Central Plains. It trades about 0.26 of its potential returns per unit of risk. Central Plains Environment is currently generating about -0.03 per unit of risk. If you would invest  1,050  in AVIC Fund Management on December 24, 2024 and sell it today you would earn a total of  162.00  from holding AVIC Fund Management or generate 15.43% return on investment over 90 days.

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

AVIC Fund Management  vs.  Central Plains Environment

AVIC Fund Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

Central Plains Envir

Risk-Adjusted Performance

Weak

Over the last 90 days Central Plains Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Central Plains is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AVIC Fund and Central Plains

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

The idea behind AVIC Fund Management and Central Plains Environment 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 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.