Correlation Between ESSILORLUXOTTICA and Fanhua
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA 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 ESSILORLUXOTTICA and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and Fanhua Inc, you can compare the effects of market volatilities on ESSILORLUXOTTICA 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 ESSILORLUXOTTICA with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and Fanhua.
Diversification Opportunities for ESSILORLUXOTTICA and Fanhua
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ESSILORLUXOTTICA and Fanhua is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and Fanhua go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and Fanhua
Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.16 times more return on investment than Fanhua. However, ESSILORLUXOTTICA 12ON is 6.33 times less risky than Fanhua. It trades about 0.21 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.37 per unit of risk. If you would invest 11,200 in ESSILORLUXOTTICA 12ON on October 12, 2024 and sell it today you would earn a total of 400.00 from holding ESSILORLUXOTTICA 12ON or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. Fanhua Inc
Performance |
| Timeline |
| ESSILORLUXOTTICA 12ON |
| Fanhua Inc |
ESSILORLUXOTTICA and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSILORLUXOTTICA and Fanhua
The main advantage of trading using opposite ESSILORLUXOTTICA and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA 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.| ESSILORLUXOTTICA vs. Apollo Investment Corp | ESSILORLUXOTTICA vs. Alfa Financial Software | ESSILORLUXOTTICA vs. CHRYSALIS INVESTMENTS LTD | ESSILORLUXOTTICA vs. SCOTT TECHNOLOGY |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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