Correlation Between China Everbright and Harvest Fund

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

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

Diversification Opportunities for China Everbright and Harvest Fund

0.21

Correlation Coefficient

China Everbright  Harvest Fund

Modest diversification

The 3 months correlation between China and Harvest is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Bank and Harvest Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Fund Management and China Everbright 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 China Everbright Bank are associated (or correlated) with Harvest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Fund Management has no effect on the direction of China Everbright i.e., China Everbright and Harvest Fund go up and down completely randomly.

Pair Corralation between China Everbright and Harvest Fund

Assuming the 90 days trading horizon China Everbright is expected to generate 31.83 times less return on investment than Harvest Fund. But when comparing it to its historical volatility, China Everbright Bank is 1.03 times less risky than Harvest Fund. It trades about 0.01 of its potential returns per unit of risk. Harvest Fund Management is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Harvest Fund Management on December 25, 2024 and sell it today you would earn a total of  74.00  from holding Harvest Fund Management or generate 27.01% return on investment over 90 days.

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

China Everbright Bank  vs.  Harvest Fund Management

China Everbright Bank

Risk-Adjusted Performance

Weak

Over the last 90 days China Everbright Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Everbright is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harvest Fund Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Fund Management are ranked lower than 24 (%) 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.

Pair Trading with China Everbright and Harvest Fund

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

The idea behind China Everbright Bank and Harvest 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.