Correlation Between Huize Holding and Brown Brown

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

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

Diversification Opportunities for Huize Holding and Brown Brown

0.04

Correlation Coefficient

Huize Holding  Brown Brown

Significant diversification

The 3 months correlation between Huize and Brown is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Huize Holding and Brown Brown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Brown and Huize Holding 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 Huize Holding are associated (or correlated) with Brown Brown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Brown has no effect on the direction of Huize Holding i.e., Huize Holding and Brown Brown go up and down completely randomly.

Pair Corralation between Huize Holding and Brown Brown

Given the investment horizon of 90 days Huize Holding is expected to under-perform the Brown Brown. In addition to that, Huize Holding is 4.22 times more volatile than Brown Brown. It trades about -0.04 of its total potential returns per unit of risk. Brown Brown is currently generating about 0.32 per unit of volatility. If you would invest  10,185  in Brown Brown on December 28, 2024 and sell it today you would earn a total of  2,105  from holding Brown Brown or generate 20.67% return on investment over 90 days.

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

Huize Holding  vs.  Brown Brown

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.

Brown Brown

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Brown are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Brown Brown displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huize Holding and Brown Brown

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

The idea behind Huize Holding and Brown Brown 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.