Correlation Between Huize Holding and Fangdd Network

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

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

Diversification Opportunities for Huize Holding and Fangdd Network

0.22

Correlation Coefficient

Huize Holding  Fangdd Network

Modest diversification

The 3 months correlation between Huize and Fangdd is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Huize Holding and Fangdd Network Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fangdd Network Group 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 Fangdd Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fangdd Network Group has no effect on the direction of Huize Holding i.e., Huize Holding and Fangdd Network go up and down completely randomly.

Pair Corralation between Huize Holding and Fangdd Network

Given the investment horizon of 90 days Huize Holding is expected to generate 0.88 times more return on investment than Fangdd Network. However, Huize Holding is 1.14 times less risky than Fangdd Network. It trades about -0.04 of its potential returns per unit of risk. Fangdd Network Group is currently generating about -0.21 per unit of risk. If you would invest  316.00  in Huize Holding on December 28, 2024 and sell it today you would lose (46.00) from holding Huize Holding or give up 14.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Huize Holding  vs.  Fangdd Network Group

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.

Fangdd Network Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fangdd Network Group 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 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 Huize Holding and Fangdd Network

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

The idea behind Huize Holding and Fangdd Network Group 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.