Correlation Between Fanhua and Arthur J
Can any of the company-specific risk be diversified away by investing in both Fanhua and Arthur J 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 Fanhua and Arthur J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and Arthur J Gallagher, you can compare the effects of market volatilities on Fanhua and Arthur J 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 Fanhua with a short position of Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and Arthur J.
Diversification Opportunities for Fanhua and Arthur J
Modest diversification
The 3 months correlation between Fanhua and Arthur is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and Fanhua 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 Fanhua Inc are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Fanhua i.e., Fanhua and Arthur J go up and down completely randomly.
Pair Corralation between Fanhua and Arthur J
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the Arthur J. In addition to that, Fanhua is 3.11 times more volatile than Arthur J Gallagher. It trades about -0.01 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.07 per unit of volatility. If you would invest 16,071 in Arthur J Gallagher on February 6, 2024 and sell it today you would earn a total of 7,913 from holding Arthur J Gallagher or generate 49.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fanhua Inc vs. Arthur J Gallagher
Performance |
| Timeline |
| Fanhua Inc |
| Arthur J Gallagher |
Fanhua and Arthur J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and Arthur J
The main advantage of trading using opposite Fanhua and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.| Fanhua vs. Willis Towers Watson | Fanhua vs. Erie Indemnity | Fanhua vs. CorVel Corp | Fanhua vs. Huize HoldingLtd |
| Arthur J vs. Willis Towers Watson | Arthur J vs. Erie Indemnity | Arthur J vs. CorVel Corp | Arthur J vs. Huize HoldingLtd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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