Correlation Between Xiamen ITG and Huaxia Fund

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

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

Diversification Opportunities for Xiamen ITG and Huaxia Fund

-0.13

Correlation Coefficient

Xiamen ITG  Huaxia Fund

Good diversification

The 3 months correlation between Xiamen and Huaxia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen ITG Group and Huaxia Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaxia Fund Management and Xiamen ITG 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 Xiamen ITG Group are associated (or correlated) with Huaxia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaxia Fund Management has no effect on the direction of Xiamen ITG i.e., Xiamen ITG and Huaxia Fund go up and down completely randomly.

Pair Corralation between Xiamen ITG and Huaxia Fund

Assuming the 90 days trading horizon Xiamen ITG Group is expected to under-perform the Huaxia Fund. In addition to that, Xiamen ITG is 1.21 times more volatile than Huaxia Fund Management. It trades about -0.14 of its total potential returns per unit of risk. Huaxia Fund Management is currently generating about 0.2 per unit of volatility. If you would invest  258.00  in Huaxia Fund Management on October 10, 2024 and sell it today you would earn a total of  40.00  from holding Huaxia Fund Management or generate 15.5% return on investment over 90 days.

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

Xiamen ITG Group  vs.  Huaxia Fund Management

Xiamen ITG Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiamen ITG Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Huaxia Fund Management

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huaxia Fund Management are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huaxia Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiamen ITG and Huaxia Fund

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

The idea behind Xiamen ITG Group and Huaxia Fund Management 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.