Correlation Between Steadfast Group and Fanhua
Can any of the company-specific risk be diversified away by investing in both Steadfast Group 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 Steadfast Group and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steadfast Group Limited and Fanhua Inc, you can compare the effects of market volatilities on Steadfast Group 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 Steadfast Group with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steadfast Group and Fanhua.
Diversification Opportunities for Steadfast Group and Fanhua
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steadfast and Fanhua is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Steadfast Group Limited and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Steadfast Group 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 Steadfast Group Limited 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 Steadfast Group i.e., Steadfast Group and Fanhua go up and down completely randomly.
Pair Corralation between Steadfast Group and Fanhua
Assuming the 90 days horizon Steadfast Group Limited is expected to generate 0.16 times more return on investment than Fanhua. However, Steadfast Group Limited is 6.18 times less risky than Fanhua. It trades about -0.13 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.37 per unit of risk. If you would invest 342.00 in Steadfast Group Limited on October 12, 2024 and sell it today you would lose (8.00) from holding Steadfast Group Limited or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steadfast Group Limited vs. Fanhua Inc
Performance |
| Timeline |
| Steadfast Group |
| Fanhua Inc |
Steadfast Group and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steadfast Group and Fanhua
The main advantage of trading using opposite Steadfast Group and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steadfast Group 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.| Steadfast Group vs. Brown Brown | Steadfast Group vs. Sabre Insurance Group | Steadfast Group vs. Superior Plus Corp | Steadfast Group vs. NMI Holdings |
| Fanhua vs. Q2M Managementberatung AG | Fanhua vs. CeoTronics AG | Fanhua vs. Ares Management Corp | Fanhua vs. VITEC SOFTWARE GROUP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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