Correlation Between AVIC Fund and Industrial Bank

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

Diversification Opportunities for AVIC Fund and Industrial Bank

0.65

Correlation Coefficient

AVIC Fund  Industrial Bank

Poor diversification

The 3 months correlation between AVIC and Industrial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of AVIC Fund i.e., AVIC Fund and Industrial Bank go up and down completely randomly.

Pair Corralation between AVIC Fund and Industrial Bank

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.4 times more return on investment than Industrial Bank. However, AVIC Fund Management is 2.47 times less risky than Industrial Bank. It trades about 0.3 of its potential returns per unit of risk. Industrial Bank Co is currently generating about 0.06 per unit of risk. If you would invest  994.00  in AVIC Fund Management on October 23, 2024 and sell it today you would earn a total of  92.00  from holding AVIC Fund Management or generate 9.26% return on investment over 90 days.

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

AVIC Fund Management  vs.  Industrial Bank Co

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 February 2025.

Industrial Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank 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 Industrial Bank

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

The idea behind AVIC Fund Management and Industrial Bank Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.