Correlation Between China Fund and Ashmore Group
Can any of the company-specific risk be diversified away by investing in both China Fund and Ashmore Group 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 Fund and Ashmore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Fund and Ashmore Group Plc, you can compare the effects of market volatilities on China Fund and Ashmore Group 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 Fund with a short position of Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Fund and Ashmore Group.
Diversification Opportunities for China Fund and Ashmore Group
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Ashmore is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding China Fund and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc and China 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 China Fund are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of China Fund i.e., China Fund and Ashmore Group go up and down completely randomly.
Pair Corralation between China Fund and Ashmore Group
Considering the 90-day investment horizon China Fund is expected to under-perform the Ashmore Group. In addition to that, China Fund is 1.66 times more volatile than Ashmore Group Plc. It trades about -0.19 of its total potential returns per unit of risk. Ashmore Group Plc is currently generating about 0.22 per unit of volatility. If you would invest 254.00 in Ashmore Group Plc on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Ashmore Group Plc or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Fund vs. Ashmore Group Plc
Performance |
| Timeline |
| China Fund |
| Ashmore Group Plc |
China Fund and Ashmore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Fund and Ashmore Group
The main advantage of trading using opposite China Fund and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund position performs unexpectedly, Ashmore Group 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 Ashmore Group will offset losses from the drop in Ashmore Group's long position.| China Fund vs. Ashmore Group Plc | China Fund vs. Mexico Equity And | China Fund vs. Western Asset Managed | China Fund vs. Blackrock Muniholdings Quality |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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