Correlation Between Ye Chiu and Huaxia Fund

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

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

Diversification Opportunities for Ye Chiu and Huaxia Fund

-0.63

Correlation Coefficient

Ye Chiu  Huaxia Fund

Excellent diversification

The 3 months correlation between 601388 and Huaxia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ye Chiu Metal 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 Ye Chiu 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 Ye Chiu Metal 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 Ye Chiu i.e., Ye Chiu and Huaxia Fund go up and down completely randomly.

Pair Corralation between Ye Chiu and Huaxia Fund

Assuming the 90 days trading horizon Ye Chiu Metal is expected to under-perform the Huaxia Fund. In addition to that, Ye Chiu is 1.47 times more volatile than Huaxia Fund Management. It trades about -0.29 of its total potential returns per unit of risk. Huaxia Fund Management is currently generating about 0.41 per unit of volatility. If you would invest  284.00  in Huaxia Fund Management on October 26, 2024 and sell it today you would earn a total of  27.00  from holding Huaxia Fund Management or generate 9.51% return on investment over 90 days.

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

Ye Chiu Metal  vs.  Huaxia Fund Management

Ye Chiu Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ye Chiu Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Huaxia Fund Management

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Huaxia Fund Management are ranked lower than 23 (%) 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 Ye Chiu and Huaxia Fund

The main advantage of trading using opposite Ye Chiu and Huaxia Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ye Chiu 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 Ye Chiu Metal 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.