Correlation Between Fanhua and Heritage-Crystal
Can any of the company-specific risk be diversified away by investing in both Fanhua and Heritage-Crystal 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 Heritage-Crystal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and Heritage Crystal Clean, you can compare the effects of market volatilities on Fanhua and Heritage-Crystal 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 Heritage-Crystal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and Heritage-Crystal.
Diversification Opportunities for Fanhua and Heritage-Crystal
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fanhua and Heritage-Crystal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Heritage Crystal Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Crystal Clean 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 Heritage-Crystal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Crystal Clean has no effect on the direction of Fanhua i.e., Fanhua and Heritage-Crystal go up and down completely randomly.
Pair Corralation between Fanhua and Heritage-Crystal
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the Heritage-Crystal. In addition to that, Fanhua is 1.83 times more volatile than Heritage Crystal Clean. It trades about -0.08 of its total potential returns per unit of risk. Heritage Crystal Clean is currently generating about 0.33 per unit of volatility. If you would invest 3,682 in Heritage Crystal Clean on August 31, 2024 and sell it today you would earn a total of 994.00 from holding Heritage Crystal Clean or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 9.2% |
| Values | Daily Returns |
Fanhua Inc vs. Heritage Crystal Clean
Performance |
| Timeline |
| Fanhua Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Heritage Crystal Clean |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fanhua and Heritage-Crystal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and Heritage-Crystal
The main advantage of trading using opposite Fanhua and Heritage-Crystal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, Heritage-Crystal 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 Heritage-Crystal will offset losses from the drop in Heritage-Crystal's long position.| Fanhua vs. Erie Indemnity | Fanhua vs. Crawford Company | Fanhua vs. Crawford Company | Fanhua vs. CorVel Corp |
| Heritage-Crystal vs. Casella Waste Systems | Heritage-Crystal vs. Montrose Environmental Grp | Heritage-Crystal vs. Clean Harbors | Heritage-Crystal vs. Waste Connections |
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.
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