Correlation Between Goldman Sachs and Fanhua

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

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

Diversification Opportunities for Goldman Sachs and Fanhua

-0.39

Correlation Coefficient

Goldman Sachs  Fanhua

Very good diversification

The 3 months correlation between Goldman and Fanhua is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs i.e., Goldman Sachs and Fanhua go up and down completely randomly.

Pair Corralation between Goldman Sachs and Fanhua

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to under-perform the Fanhua. But the stock apears to be less risky and, when comparing its historical volatility, Goldman Sachs Group is 3.85 times less risky than Fanhua. The stock trades about -0.21 of its potential returns per unit of risk. The Fanhua Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Fanhua Inc on September 19, 2024 and sell it today you would lose (3.00) from holding Fanhua Inc or give up 2.65% of portfolio value over 90 days.

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

Goldman Sachs Group  vs.  Fanhua Inc

Goldman Sachs Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Goldman Sachs 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 Goldman Sachs and Fanhua

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

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.