Correlation Between Fanhua and CorVel Corp
Can any of the company-specific risk be diversified away by investing in both Fanhua and CorVel Corp 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 CorVel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and CorVel Corp, you can compare the effects of market volatilities on Fanhua and CorVel Corp 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 CorVel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and CorVel Corp.
Diversification Opportunities for Fanhua and CorVel Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fanhua and CorVel is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp 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 CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of Fanhua i.e., Fanhua and CorVel Corp go up and down completely randomly.
Pair Corralation between Fanhua and CorVel Corp
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the CorVel Corp. In addition to that, Fanhua is 4.35 times more volatile than CorVel Corp. It trades about -0.71 of its total potential returns per unit of risk. CorVel Corp is currently generating about 0.3 per unit of volatility. If you would invest 30,433 in CorVel Corp on August 24, 2024 and sell it today you would earn a total of 6,139 from holding CorVel Corp or generate 20.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.7% |
| Values | Daily Returns |
Fanhua Inc vs. CorVel Corp
Performance |
| Timeline |
| Fanhua Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| CorVel Corp |
Fanhua and CorVel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and CorVel Corp
The main advantage of trading using opposite Fanhua and CorVel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, CorVel Corp 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 CorVel Corp will offset losses from the drop in CorVel Corp's long position.| Fanhua vs. Erie Indemnity | Fanhua vs. Crawford Company | Fanhua vs. Crawford Company | Fanhua vs. CorVel Corp |
| CorVel Corp vs. Erie Indemnity | CorVel Corp vs. Huize Holding | CorVel Corp vs. Crawford Company | CorVel Corp vs. eHealth |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |