Correlation Between Fanhua and EHealth
Can any of the company-specific risk be diversified away by investing in both Fanhua and EHealth 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 EHealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and eHealth, you can compare the effects of market volatilities on Fanhua and EHealth 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 EHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and EHealth.
Diversification Opportunities for Fanhua and EHealth
Poor diversification
The 3 months correlation between Fanhua and EHealth is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and eHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eHealth 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 EHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eHealth has no effect on the direction of Fanhua i.e., Fanhua and EHealth go up and down completely randomly.
Pair Corralation between Fanhua and EHealth
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the EHealth. But the stock apears to be less risky and, when comparing its historical volatility, Fanhua Inc is 1.03 times less risky than EHealth. The stock trades about -0.35 of its potential returns per unit of risk. The eHealth is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 545.00 in eHealth on January 18, 2024 and sell it today you would lose (116.00) from holding eHealth or give up 21.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fanhua Inc vs. eHealth
Performance |
Timeline |
Fanhua Inc |
eHealth |
Fanhua and EHealth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fanhua and EHealth
The main advantage of trading using opposite Fanhua and EHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, EHealth 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 EHealth will offset losses from the drop in EHealth's long position.Fanhua vs. GoHealth | Fanhua vs. Tian Ruixiang Holdings | Fanhua vs. Huize HoldingLtd | Fanhua vs. CorVel Corp |
EHealth vs. GoHealth | EHealth vs. Tian Ruixiang Holdings | EHealth vs. Huize HoldingLtd | EHealth vs. CorVel Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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