Correlation Between Rbc China and Fidelity China

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

By analyzing existing cross correlation between Rbc China Equity and Fidelity China Region, you can compare the effects of market volatilities on Rbc China and Fidelity China 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 Rbc China with a short position of Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc China and Fidelity China.

Diversification Opportunities for Rbc China and Fidelity China

0.96

Correlation Coefficient

Rbc China  Fidelity China

Almost no diversification

The 3 months correlation between Rbc and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Rbc China Equity and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region and Rbc China 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 Rbc China Equity are associated (or correlated) with Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Rbc China i.e., Rbc China and Fidelity China go up and down completely randomly.

Pair Corralation between Rbc China and Fidelity China

Assuming the 90 days horizon Rbc China Equity is expected to under-perform the Fidelity China. In addition to that, Rbc China is 1.18 times more volatile than Fidelity China Region. It trades about -0.52 of its total potential returns per unit of risk. Fidelity China Region is currently generating about -0.26 per unit of volatility. If you would invest  4,066  in Fidelity China Region on October 9, 2024 and sell it today you would lose (205.00) from holding Fidelity China Region or give up 5.04% of portfolio value over 90 days.

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

Rbc China Equity  vs.  Fidelity China Region

Rbc China Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc China Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly 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 fund investors.

Fidelity China Region

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity China Region has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Rbc China and Fidelity China

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

The idea behind Rbc China Equity and Fidelity China Region 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.