Correlation Between AVIC Fund and Sinotrans

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

Diversification Opportunities for AVIC Fund and Sinotrans

0.23

Correlation Coefficient

AVIC Fund  Sinotrans

Modest diversification

The 3 months correlation between AVIC and Sinotrans is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Sinotrans Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotrans Class 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 Sinotrans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotrans Class has no effect on the direction of AVIC Fund i.e., AVIC Fund and Sinotrans go up and down completely randomly.

Pair Corralation between AVIC Fund and Sinotrans

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.4 times more return on investment than Sinotrans. However, AVIC Fund Management is 2.51 times less risky than Sinotrans. It trades about 0.4 of its potential returns per unit of risk. Sinotrans Ltd Class is currently generating about 0.0 per unit of risk. If you would invest  996.00  in AVIC Fund Management on October 7, 2024 and sell it today you would earn a total of  88.00  from holding AVIC Fund Management or generate 8.84% 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.  Sinotrans Ltd Class

AVIC Fund Management

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 27 (%) 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.

Sinotrans Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinotrans Ltd Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinotrans 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 Sinotrans

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

The idea behind AVIC Fund Management and Sinotrans Ltd Class 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.