Correlation Between China Fund and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both China Fund and Cornerstone Strategic 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 Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Fund and Cornerstone Strategic Value, you can compare the effects of market volatilities on China Fund and Cornerstone Strategic 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 Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Fund and Cornerstone Strategic.
Diversification Opportunities for China Fund and Cornerstone Strategic
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Cornerstone is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Fund and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of China Fund i.e., China Fund and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between China Fund and Cornerstone Strategic
Considering the 90-day investment horizon China Fund is expected to generate 1.11 times more return on investment than Cornerstone Strategic. However, China Fund is 1.11 times more volatile than Cornerstone Strategic Value. It trades about 0.02 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about -0.09 per unit of risk. If you would invest 1,264 in China Fund on September 12, 2024 and sell it today you would earn a total of 4.00 from holding China Fund or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Fund vs. Cornerstone Strategic Value
Performance |
| Timeline |
| China Fund |
| Cornerstone Strategic |
China Fund and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Fund and Cornerstone Strategic
The main advantage of trading using opposite China Fund and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| China Fund vs. Oxford Lane Capital | China Fund vs. Orchid Island Capital | China Fund vs. Guggenheim Strategic Opportunities | China Fund vs. Stone Harbor Emerging |
| Cornerstone Strategic vs. Oxford Lane Capital | Cornerstone Strategic vs. Orchid Island Capital | Cornerstone Strategic vs. Guggenheim Strategic Opportunities | Cornerstone Strategic vs. Stone Harbor Emerging |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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