Correlation Between Huize Holding and Kingsway Financial

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

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

Diversification Opportunities for Huize Holding and Kingsway Financial

0.29

Correlation Coefficient

Huize Holding  Kingsway Financial

Modest diversification

The 3 months correlation between Huize and Kingsway is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Huize Holding and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Huize Holding i.e., Huize Holding and Kingsway Financial go up and down completely randomly.

Pair Corralation between Huize Holding and Kingsway Financial

Given the investment horizon of 90 days Huize Holding is expected to generate 8.43 times less return on investment than Kingsway Financial. In addition to that, Huize Holding is 1.13 times more volatile than Kingsway Financial Services. It trades about 0.02 of its total potential returns per unit of risk. Kingsway Financial Services is currently generating about 0.21 per unit of volatility. If you would invest  893.00  in Kingsway Financial Services on May 5, 2025 and sell it today you would earn a total of  443.00  from holding Kingsway Financial Services or generate 49.61% return on investment over 90 days.

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

Huize Holding  vs.  Kingsway Financial Services

Huize Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huize Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Huize Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kingsway Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsway Financial Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Kingsway Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huize Holding and Kingsway Financial

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

The idea behind Huize Holding and Kingsway Financial Services 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.