Correlation Between Youdao and Huize Holding

Can any of the company-specific risk be diversified away by investing in both Youdao and Huize Holding 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 Youdao and Huize Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Youdao Inc and Huize Holding, you can compare the effects of market volatilities on Youdao and Huize Holding 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 Youdao with a short position of Huize Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youdao and Huize Holding.

Diversification Opportunities for Youdao and Huize Holding

0.64

Correlation Coefficient

Youdao  Huize Holding

Poor diversification

The 3 months correlation between Youdao and Huize is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Youdao Inc and Huize Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huize Holding and Youdao 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 Youdao Inc are associated (or correlated) with Huize Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huize Holding has no effect on the direction of Youdao i.e., Youdao and Huize Holding go up and down completely randomly.

Pair Corralation between Youdao and Huize Holding

Considering the 90-day investment horizon Youdao is expected to generate 2.29 times less return on investment than Huize Holding. But when comparing it to its historical volatility, Youdao Inc is 3.06 times less risky than Huize Holding. It trades about 0.13 of its potential returns per unit of risk. Huize Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Huize Holding on July 24, 2025 and sell it today you would earn a total of  104.00  from holding Huize Holding or generate 39.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Youdao Inc  vs.  Huize Holding

Youdao Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Youdao Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Youdao displayed solid returns over the last few months and may actually be approaching a breakup point.

Huize Holding

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Huize Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Huize Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youdao and Huize Holding

The main advantage of trading using opposite Youdao and Huize Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youdao position performs unexpectedly, Huize Holding 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 Huize Holding will offset losses from the drop in Huize Holding's long position.

The idea behind Youdao Inc and Huize Holding 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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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.