Correlation Between AVIC Fund and NAURA Technology

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

Diversification Opportunities for AVIC Fund and NAURA Technology

0.39

Correlation Coefficient

AVIC Fund  NAURA Technology

Weak diversification

The 3 months correlation between AVIC and NAURA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology 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 NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of AVIC Fund i.e., AVIC Fund and NAURA Technology go up and down completely randomly.

Pair Corralation between AVIC Fund and NAURA Technology

Assuming the 90 days trading horizon AVIC Fund is expected to generate 3.5 times less return on investment than NAURA Technology. But when comparing it to its historical volatility, AVIC Fund Management is 6.57 times less risky than NAURA Technology. It trades about 0.17 of its potential returns per unit of risk. NAURA Technology Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  31,387  in NAURA Technology Group on September 23, 2024 and sell it today you would earn a total of  10,033  from holding NAURA Technology Group or generate 31.97% return on investment over 90 days.

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

AVIC Fund Management  vs.  NAURA Technology Group

AVIC Fund Management

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NAURA Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAURA Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVIC Fund and NAURA Technology

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

The idea behind AVIC Fund Management and NAURA Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.