Correlation Between Stagwell and Fanhua

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

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

Diversification Opportunities for Stagwell and Fanhua

0.69

Correlation Coefficient

Stagwell  Fanhua

Poor diversification

The 3 months correlation between Stagwell and Fanhua is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Stagwell 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 Stagwell are associated (or correlated) with Fanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanhua Inc has no effect on the direction of Stagwell i.e., Stagwell and Fanhua go up and down completely randomly.

Pair Corralation between Stagwell and Fanhua

Given the investment horizon of 90 days Stagwell is expected to generate 0.28 times more return on investment than Fanhua. However, Stagwell is 3.52 times less risky than Fanhua. It trades about -0.06 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.18 per unit of risk. If you would invest  682.00  in Stagwell on December 20, 2024 and sell it today you would lose (72.00) from holding Stagwell or give up 10.56% of portfolio value over 90 days.

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

Stagwell  vs.  Fanhua Inc

Stagwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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 fragile 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.

Pair Trading with Stagwell and Fanhua

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

The idea behind Stagwell and Fanhua Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.