Correlation Between Zhibao Technology and Huize Holding

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

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

Diversification Opportunities for Zhibao Technology and Huize Holding

-0.36

Correlation Coefficient

Zhibao Technology  Huize Holding

Very good diversification

The 3 months correlation between Zhibao and Huize is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Zhibao Technology Class and Huize Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huize Holding and Zhibao Technology 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 Zhibao Technology Class 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 Zhibao Technology i.e., Zhibao Technology and Huize Holding go up and down completely randomly.

Pair Corralation between Zhibao Technology and Huize Holding

Given the investment horizon of 90 days Zhibao Technology Class is expected to under-perform the Huize Holding. But the stock apears to be less risky and, when comparing its historical volatility, Zhibao Technology Class is 21.9 times less risky than Huize Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Huize Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Huize Holding on September 14, 2024 and sell it today you would earn a total of  264.00  from holding Huize Holding or generate 388.24% return on investment over 90 days.

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

Zhibao Technology Class  vs.  Huize Holding

Zhibao Technology Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhibao Technology Class 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Huize Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huize Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, Huize Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhibao Technology and Huize Holding

The main advantage of trading using opposite Zhibao Technology and Huize Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhibao Technology 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 Zhibao Technology Class 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.