Correlation Between Arthur J and Huize Holding

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

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

Diversification Opportunities for Arthur J and Huize Holding

0.1

Correlation Coefficient

Arthur J  Huize Holding

Average diversification

The 3 months correlation between Arthur and Huize is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and Huize Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huize Holding and Arthur J 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 Arthur J Gallagher are associated (or correlated) with Huize Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huize Holding has no effect on the direction of Arthur J i.e., Arthur J and Huize Holding go up and down completely randomly.

Pair Corralation between Arthur J and Huize Holding

Considering the 90-day investment horizon Arthur J Gallagher is expected to generate 0.31 times more return on investment than Huize Holding. However, Arthur J Gallagher is 3.19 times less risky than Huize Holding. It trades about 0.24 of its potential returns per unit of risk. Huize Holding is currently generating about -0.04 per unit of risk. If you would invest  28,392  in Arthur J Gallagher on December 29, 2024 and sell it today you would earn a total of  5,708  from holding Arthur J Gallagher or generate 20.1% return on investment over 90 days.

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

Arthur J Gallagher  vs.  Huize Holding

Arthur J Gallagher

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking indicators, Arthur J reported solid returns over the last few months and may actually be approaching a breakup point.

Huize Holding

Risk-Adjusted Performance

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 conflicting 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.

Pair Trading with Arthur J and Huize Holding

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

The idea behind Arthur J Gallagher and Huize Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.