Correlation Between Byline Bancorp and Fanhua

Can any of the company-specific risk be diversified away by investing in both Byline Bancorp 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 Byline Bancorp and Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byline Bancorp and Fanhua Inc, you can compare the effects of market volatilities on Byline Bancorp 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 Byline Bancorp with a short position of Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Fanhua.

Diversification Opportunities for Byline Bancorp and Fanhua

-0.55

Correlation Coefficient

Byline Bancorp  Fanhua

Excellent diversification

The 3 months correlation between Byline and Fanhua is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Byline Bancorp 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 Byline Bancorp 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 Byline Bancorp i.e., Byline Bancorp and Fanhua go up and down completely randomly.

Pair Corralation between Byline Bancorp and Fanhua

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.46 times more return on investment than Fanhua. However, Byline Bancorp is 2.19 times less risky than Fanhua. It trades about 0.05 of its potential returns per unit of risk. Fanhua Inc is currently generating about 0.01 per unit of risk. If you would invest  2,747  in Byline Bancorp on September 19, 2024 and sell it today you would earn a total of  164.00  from holding Byline Bancorp or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Byline Bancorp  vs.  Fanhua Inc

Byline Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fanhua Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fanhua Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Fanhua is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Byline Bancorp and Fanhua

The main advantage of trading using opposite Byline Bancorp and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp 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 Byline Bancorp 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.