Correlation Between Huaxia Fund and Shanghai CEO

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Can any of the company-specific risk be diversified away by investing in both Huaxia Fund and Shanghai CEO 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 Huaxia Fund and Shanghai CEO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaxia Fund Management and Shanghai CEO Environmental, you can compare the effects of market volatilities on Huaxia Fund and Shanghai CEO 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 Huaxia Fund with a short position of Shanghai CEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaxia Fund and Shanghai CEO.

Diversification Opportunities for Huaxia Fund and Shanghai CEO

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Huaxia and Shanghai is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Huaxia Fund Management and Shanghai CEO Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai CEO Environ and Huaxia 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 Huaxia Fund Management are associated (or correlated) with Shanghai CEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai CEO Environ has no effect on the direction of Huaxia Fund i.e., Huaxia Fund and Shanghai CEO go up and down completely randomly.

Pair Corralation between Huaxia Fund and Shanghai CEO

Assuming the 90 days trading horizon Huaxia Fund is expected to generate 35.52 times less return on investment than Shanghai CEO. But when comparing it to its historical volatility, Huaxia Fund Management is 45.79 times less risky than Shanghai CEO. It trades about 0.05 of its potential returns per unit of risk. Shanghai CEO Environmental is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,353  in Shanghai CEO Environmental on October 29, 2024 and sell it today you would lose (1,486) from holding Shanghai CEO Environmental or give up 63.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Huaxia Fund Management  vs.  Shanghai CEO Environmental

 Performance 
       Timeline  
Huaxia Fund Management 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Huaxia Fund Management are ranked lower than 22 (%) 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.
Shanghai CEO Environ 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shanghai CEO Environmental 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 and Shanghai CEO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huaxia Fund and Shanghai CEO

The main advantage of trading using opposite Huaxia Fund and Shanghai CEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaxia Fund position performs unexpectedly, Shanghai CEO 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 Shanghai CEO will offset losses from the drop in Shanghai CEO's long position.
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The idea behind Huaxia Fund Management and Shanghai CEO Environmental 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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Check out your portfolio center.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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