Correlation Between Reliance Global and Huize Holding
Can any of the company-specific risk be diversified away by investing in both Reliance Global and Huize Holding 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 Reliance Global and Huize Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Global Group and Huize Holding, you can compare the effects of market volatilities on Reliance Global and Huize Holding 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 Reliance Global with a short position of Huize Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Global and Huize Holding.
Diversification Opportunities for Reliance Global and Huize Holding
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reliance and Huize is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group and Huize Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huize Holding and Reliance Global 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 Reliance Global Group are associated (or correlated) with Huize Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huize Holding has no effect on the direction of Reliance Global i.e., Reliance Global and Huize Holding go up and down completely randomly.
Pair Corralation between Reliance Global and Huize Holding
Assuming the 90 days horizon Reliance Global Group is expected to generate 3.84 times more return on investment than Huize Holding. However, Reliance Global is 3.84 times more volatile than Huize Holding. It trades about 0.19 of its potential returns per unit of risk. Huize Holding is currently generating about 0.04 per unit of risk. If you would invest 7.59 in Reliance Global Group on November 9, 2024 and sell it today you would lose (2.30) from holding Reliance Global Group or give up 30.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.56% |
| Values | Daily Returns |
Reliance Global Group vs. Huize Holding
Performance |
| Timeline |
| Reliance Global Group |
| Huize Holding |
Reliance Global and Huize Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Global and Huize Holding
The main advantage of trading using opposite Reliance Global and Huize Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Global position performs unexpectedly, Huize Holding 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 Huize Holding will offset losses from the drop in Huize Holding's long position.The idea behind Reliance Global Group and Huize Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Huize Holding vs. CorVel Corp | Huize Holding vs. Erie Indemnity | Huize Holding vs. Crawford Company | Huize Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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