Correlation Between AVIC Fund and Shengtak New

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

Diversification Opportunities for AVIC Fund and Shengtak New

-0.26

Correlation Coefficient

AVIC Fund  Shengtak New

Very good diversification

The 3 months correlation between AVIC and Shengtak is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Shengtak New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengtak New Material 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 Shengtak New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengtak New Material has no effect on the direction of AVIC Fund i.e., AVIC Fund and Shengtak New go up and down completely randomly.

Pair Corralation between AVIC Fund and Shengtak New

Assuming the 90 days trading horizon AVIC Fund is expected to generate 1.75 times less return on investment than Shengtak New. But when comparing it to its historical volatility, AVIC Fund Management is 6.32 times less risky than Shengtak New. It trades about 0.16 of its potential returns per unit of risk. Shengtak New Material is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,430  in Shengtak New Material on October 2, 2024 and sell it today you would earn a total of  644.00  from holding Shengtak New Material or generate 26.5% 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.  Shengtak New Material

AVIC Fund Management

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 23 (%) 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.

Shengtak New Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengtak New Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AVIC Fund and Shengtak New

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

The idea behind AVIC Fund Management and Shengtak New Material 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.