Correlation Between AVIC Fund and Shengyuan Environmental

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

Diversification Opportunities for AVIC Fund and Shengyuan Environmental

-0.25

Correlation Coefficient

AVIC Fund  Shengyuan Environmental

Very good diversification

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

Pair Corralation between AVIC Fund and Shengyuan Environmental

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.44 times more return on investment than Shengyuan Environmental. However, AVIC Fund Management is 2.28 times less risky than Shengyuan Environmental. It trades about 0.64 of its potential returns per unit of risk. Shengyuan Environmental Protection is currently generating about -0.5 per unit of risk. If you would invest  1,011  in AVIC Fund Management on October 9, 2024 and sell it today you would earn a total of  88.00  from holding AVIC Fund Management or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

AVIC Fund Management  vs.  Shengyuan Environmental Protec

AVIC Fund Management

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 30 (%) 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 February 2025.

Shengyuan Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengyuan Environmental Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AVIC Fund and Shengyuan Environmental

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

The idea behind AVIC Fund Management and Shengyuan Environmental Protection 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.