Correlation Between Fanhua and Zhibao Technology

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

By analyzing existing cross correlation between Fanhua Inc and Zhibao Technology Class, you can compare the effects of market volatilities on Fanhua and Zhibao Technology 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 Zhibao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and Zhibao Technology.

Diversification Opportunities for Fanhua and Zhibao Technology

0.74

Correlation Coefficient

Fanhua  Zhibao Technology

Poor diversification

The 3 months correlation between Fanhua and Zhibao is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Zhibao Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhibao Technology Class 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 Zhibao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhibao Technology Class has no effect on the direction of Fanhua i.e., Fanhua and Zhibao Technology go up and down completely randomly.

Pair Corralation between Fanhua and Zhibao Technology

Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the Zhibao Technology. In addition to that, Fanhua is 1.63 times more volatile than Zhibao Technology Class. It trades about -0.23 of its total potential returns per unit of risk. Zhibao Technology Class is currently generating about -0.09 per unit of volatility. If you would invest  175.00  in Zhibao Technology Class on December 28, 2024 and sell it today you would lose (55.00) from holding Zhibao Technology Class or give up 31.43% of portfolio value over 90 days.

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

Fanhua Inc  vs.  Zhibao Technology Class

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. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Zhibao Technology Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhibao Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fanhua and Zhibao Technology

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

The idea behind Fanhua Inc and Zhibao Technology Class 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.