Correlation Between FUTURE GAMING and Fanhua

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

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

Diversification Opportunities for FUTURE GAMING and Fanhua

0.66

Correlation Coefficient

FUTURE GAMING  Fanhua

Poor diversification

The 3 months correlation between FUTURE and Fanhua is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and FUTURE GAMING 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 FUTURE GAMING GRP are associated (or correlated) with Fanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanhua Inc has no effect on the direction of FUTURE GAMING i.e., FUTURE GAMING and Fanhua go up and down completely randomly.

Pair Corralation between FUTURE GAMING and Fanhua

Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to generate 0.3 times more return on investment than Fanhua. However, FUTURE GAMING GRP is 3.38 times less risky than Fanhua. It trades about -0.04 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.12 per unit of risk. If you would invest  51.00  in FUTURE GAMING GRP on December 21, 2024 and sell it today you would lose (6.00) from holding FUTURE GAMING GRP or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

FUTURE GAMING GRP  vs.  Fanhua Inc

FUTURE GAMING GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days FUTURE GAMING GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fanhua Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fanhua Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FUTURE GAMING and Fanhua

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

The idea behind FUTURE GAMING GRP and Fanhua Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..