Correlation Between AVIC Fund and Zhuzhou CRRC

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

Diversification Opportunities for AVIC Fund and Zhuzhou CRRC

-0.08

Correlation Coefficient

AVIC Fund  Zhuzhou CRRC

Good diversification

The 3 months correlation between AVIC and Zhuzhou is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management and Zhuzhou CRRC Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou CRRC Times 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 Zhuzhou CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou CRRC Times has no effect on the direction of AVIC Fund i.e., AVIC Fund and Zhuzhou CRRC go up and down completely randomly.

Pair Corralation between AVIC Fund and Zhuzhou CRRC

Assuming the 90 days trading horizon AVIC Fund Management is expected to generate 0.23 times more return on investment than Zhuzhou CRRC. However, AVIC Fund Management is 4.39 times less risky than Zhuzhou CRRC. It trades about 0.44 of its potential returns per unit of risk. Zhuzhou CRRC Times is currently generating about -0.04 per unit of risk. If you would invest  997.00  in AVIC Fund Management on September 20, 2024 and sell it today you would earn a total of  38.00  from holding AVIC Fund Management or generate 3.81% 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.  Zhuzhou CRRC Times

AVIC Fund Management

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AVIC Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhuzhou CRRC Times

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou CRRC Times are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuzhou CRRC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVIC Fund and Zhuzhou CRRC

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

The idea behind AVIC Fund Management and Zhuzhou CRRC Times 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.