Correlation Between Fanhua and ATWEC Technologies
Can any of the company-specific risk be diversified away by investing in both Fanhua and ATWEC Technologies 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 Fanhua and ATWEC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and ATWEC Technologies, you can compare the effects of market volatilities on Fanhua and ATWEC Technologies 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 Fanhua with a short position of ATWEC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and ATWEC Technologies.
Diversification Opportunities for Fanhua and ATWEC Technologies
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fanhua and ATWEC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and ATWEC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATWEC Technologies and Fanhua 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 Fanhua Inc are associated (or correlated) with ATWEC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATWEC Technologies has no effect on the direction of Fanhua i.e., Fanhua and ATWEC Technologies go up and down completely randomly.
Pair Corralation between Fanhua and ATWEC Technologies
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the ATWEC Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Fanhua Inc is 5.9 times less risky than ATWEC Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The ATWEC Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.13 in ATWEC Technologies on August 31, 2024 and sell it today you would lose (0.01) from holding ATWEC Technologies or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.3% |
| Values | Daily Returns |
Fanhua Inc vs. ATWEC Technologies
Performance |
| Timeline |
| Fanhua Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| ATWEC Technologies |
Fanhua and ATWEC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and ATWEC Technologies
The main advantage of trading using opposite Fanhua and ATWEC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, ATWEC Technologies 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 ATWEC Technologies will offset losses from the drop in ATWEC Technologies' long position.| Fanhua vs. Erie Indemnity | Fanhua vs. Crawford Company | Fanhua vs. Crawford Company | Fanhua vs. CorVel Corp |
| ATWEC Technologies vs. Allegion PLC | ATWEC Technologies vs. MSA Safety | ATWEC Technologies vs. HUMANA INC | ATWEC Technologies vs. Aquagold International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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