Correlation Between Huize Holding and CorVel Corp

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

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

Diversification Opportunities for Huize Holding and CorVel Corp

-0.53

Correlation Coefficient

Huize Holding  CorVel Corp

Excellent diversification

The 3 months correlation between Huize and CorVel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Huize Holding and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp and Huize Holding 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 Huize Holding are associated (or correlated) with CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of Huize Holding i.e., Huize Holding and CorVel Corp go up and down completely randomly.

Pair Corralation between Huize Holding and CorVel Corp

Given the investment horizon of 90 days Huize Holding is expected to under-perform the CorVel Corp. In addition to that, Huize Holding is 1.86 times more volatile than CorVel Corp. It trades about -0.18 of its total potential returns per unit of risk. CorVel Corp is currently generating about 0.26 per unit of volatility. If you would invest  30,747  in CorVel Corp on August 30, 2024 and sell it today you would earn a total of  5,392  from holding CorVel Corp or generate 17.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Huize Holding  vs.  CorVel Corp

Huize Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huize Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

CorVel Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CorVel Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, CorVel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huize Holding and CorVel Corp

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

The idea behind Huize Holding and CorVel Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.