Correlation Between CNFinance Holdings and UWM Holdings

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

By analyzing existing cross correlation between CNFinance Holdings and UWM Holdings Corp, you can compare the effects of market volatilities on CNFinance Holdings and UWM Holdings 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 CNFinance Holdings with a short position of UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and UWM Holdings.

Diversification Opportunities for CNFinance Holdings and UWM Holdings

0.24

Correlation Coefficient

CNFinance Holdings  UWM Holdings

Modest diversification

The 3 months correlation between CNFinance and UWM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and UWM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UWM Holdings Corp and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with UWM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UWM Holdings Corp has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and UWM Holdings go up and down completely randomly.

Pair Corralation between CNFinance Holdings and UWM Holdings

Considering the 90-day investment horizon CNFinance Holdings is expected to generate 2.28 times more return on investment than UWM Holdings. However, CNFinance Holdings is 2.28 times more volatile than UWM Holdings Corp. It trades about 0.07 of its potential returns per unit of risk. UWM Holdings Corp is currently generating about 0.03 per unit of risk. If you would invest  95.00  in CNFinance Holdings on November 29, 2024 and sell it today you would earn a total of  16.00  from holding CNFinance Holdings or generate 16.84% return on investment over 90 days.

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

CNFinance Holdings  vs.  UWM Holdings Corp

CNFinance Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNFinance Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, CNFinance Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

UWM Holdings Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UWM Holdings Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, UWM Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CNFinance Holdings and UWM Holdings

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

The idea behind CNFinance Holdings and UWM Holdings Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.