Correlation Between GE Aerospace and Fanhua
Can any of the company-specific risk be diversified away by investing in both GE Aerospace 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 GE Aerospace and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Fanhua Inc, you can compare the effects of market volatilities on GE Aerospace 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 GE Aerospace with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Fanhua.
Diversification Opportunities for GE Aerospace and Fanhua
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Fanhua is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and GE Aerospace 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 GE Aerospace 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 GE Aerospace i.e., GE Aerospace and Fanhua go up and down completely randomly.
Pair Corralation between GE Aerospace and Fanhua
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.4 times more return on investment than Fanhua. However, GE Aerospace is 2.5 times less risky than Fanhua. It trades about 0.15 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.06 per unit of risk. If you would invest 5,696 in GE Aerospace on August 28, 2024 and sell it today you would earn a total of 12,325 from holding GE Aerospace or generate 216.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.17% |
| Values | Daily Returns |
GE Aerospace vs. Fanhua Inc
Performance |
| Timeline |
| GE Aerospace |
| Fanhua Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
GE Aerospace and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Fanhua
The main advantage of trading using opposite GE Aerospace and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace 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.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Fanhua vs. Erie Indemnity | Fanhua vs. Crawford Company | Fanhua vs. Crawford Company | Fanhua vs. CorVel Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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