Correlation Between Brp and Fanhua
Can any of the company-specific risk be diversified away by investing in both Brp 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 Brp and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brp Group and Fanhua Inc, you can compare the effects of market volatilities on Brp 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 Brp with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brp and Fanhua.
Diversification Opportunities for Brp and Fanhua
Very good diversification
The 3 months correlation between Brp and Fanhua is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Brp Group and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Brp 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 Brp Group 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 Brp i.e., Brp and Fanhua go up and down completely randomly.
Pair Corralation between Brp and Fanhua
Considering the 90-day investment horizon Brp Group is expected to generate 0.41 times more return on investment than Fanhua. However, Brp Group is 2.44 times less risky than Fanhua. It trades about -0.08 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.31 per unit of risk. If you would invest 2,903 in Brp Group on February 7, 2024 and sell it today you would lose (93.00) from holding Brp Group or give up 3.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Brp Group vs. Fanhua Inc
Performance |
Timeline |
Brp Group |
Fanhua Inc |
Brp and Fanhua Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brp and Fanhua
The main advantage of trading using opposite Brp and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brp 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.The idea behind Brp Group and Fanhua Inc 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.Fanhua vs. Willis Towers Watson | Fanhua vs. Erie Indemnity | Fanhua vs. CorVel Corp | Fanhua vs. Huize HoldingLtd |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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