Correlation Between Harvest Fund and Cambricon Technologies

Can any of the company-specific risk be diversified away by investing in both Harvest Fund and Cambricon Technologies 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 Harvest Fund and Cambricon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harvest Fund Management and Cambricon Technologies Corp, you can compare the effects of market volatilities on Harvest Fund and Cambricon Technologies 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 Harvest Fund with a short position of Cambricon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Fund and Cambricon Technologies.

Diversification Opportunities for Harvest Fund and Cambricon Technologies

0.76

Correlation Coefficient

Harvest Fund  Cambricon Technologies

Poor diversification

The 3 months correlation between Harvest and Cambricon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Fund Management and Cambricon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambricon Technologies and Harvest 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 Harvest Fund Management are associated (or correlated) with Cambricon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambricon Technologies has no effect on the direction of Harvest Fund i.e., Harvest Fund and Cambricon Technologies go up and down completely randomly.

Pair Corralation between Harvest Fund and Cambricon Technologies

Assuming the 90 days trading horizon Harvest Fund Management is expected to under-perform the Cambricon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Harvest Fund Management is 4.07 times less risky than Cambricon Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Cambricon Technologies Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,990  in Cambricon Technologies Corp on October 24, 2024 and sell it today you would earn a total of  55,510  from holding Cambricon Technologies Corp or generate 794.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.17%
Values	Daily Returns

Harvest Fund Management  vs.  Cambricon Technologies Corp

Harvest Fund Management

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Fund Management are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harvest Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

Cambricon Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambricon Technologies Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cambricon Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harvest Fund and Cambricon Technologies

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

The idea behind Harvest Fund Management and Cambricon Technologies Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.