Correlation Between Fanhua and Arthur J

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

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

Diversification Opportunities for Fanhua and Arthur J

-0.07

Correlation Coefficient

Fanhua  Arthur J

Good diversification

The 3 months correlation between Fanhua and Arthur is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and Fanhua 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 Fanhua Inc are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Fanhua i.e., Fanhua and Arthur J go up and down completely randomly.

Pair Corralation between Fanhua and Arthur J

Given the investment horizon of 90 days Fanhua Inc is expected to generate 4.76 times more return on investment than Arthur J. However, Fanhua is 4.76 times more volatile than Arthur J Gallagher. It trades about 0.04 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.05 per unit of risk. If you would invest  121.00  in Fanhua Inc on September 12, 2024 and sell it today you would earn a total of  7.00  from holding Fanhua Inc or generate 5.79% return on investment over 90 days.

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

Fanhua Inc  vs.  Arthur J Gallagher

Fanhua Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fanhua Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Fanhua unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arthur J Gallagher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arthur J Gallagher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Arthur J is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fanhua and Arthur J

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

The idea behind Fanhua Inc and Arthur J Gallagher 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .