Correlation Between AVIC Fund and Sunny Loan

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

Diversification Opportunities for AVIC Fund and Sunny Loan

-0.19

Correlation Coefficient

AVIC Fund  Sunny Loan

Good diversification

The 3 months correlation between AVIC and Sunny is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Sunny Loan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Loan Top 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 Sunny Loan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Loan Top has no effect on the direction of AVIC Fund i.e., AVIC Fund and Sunny Loan go up and down completely randomly.

Pair Corralation between AVIC Fund and Sunny Loan

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.14 times more return on investment than Sunny Loan. However, AVIC Fund Management is 6.91 times less risky than Sunny Loan. It trades about 0.62 of its potential returns per unit of risk. Sunny Loan Top is currently generating about -0.22 per unit of risk. If you would invest  1,011  in AVIC Fund Management on October 10, 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	95.45%
Values	Daily Returns

AVIC Fund Management  vs.  Sunny Loan Top

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.

Sunny Loan Top

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunny Loan Top 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 Sunny Loan

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

The idea behind AVIC Fund Management and Sunny Loan Top 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.