Correlation Between Huize Holding and Dollar General

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

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

Diversification Opportunities for Huize Holding and Dollar General

0.47

Correlation Coefficient

Huize Holding  Dollar General

Very weak diversification

The 3 months correlation between Huize and Dollar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huize Holding and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Huize Holding i.e., Huize Holding and Dollar General go up and down completely randomly.

Pair Corralation between Huize Holding and Dollar General

Given the investment horizon of 90 days Huize Holding is expected to generate 1.36 times more return on investment than Dollar General. However, Huize Holding is 1.36 times more volatile than Dollar General. It trades about -0.03 of its potential returns per unit of risk. Dollar General is currently generating about -0.14 per unit of risk. If you would invest  90.00  in Huize Holding on August 20, 2024 and sell it today you would lose (17.00) from holding Huize Holding or give up 18.89% of portfolio value over 90 days.

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

Huize Holding  vs.  Dollar General

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 latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dollar General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dollar General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Huize Holding and Dollar General

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

The idea behind Huize Holding and Dollar General 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.