Correlation Between ATRenew and Fanhua

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

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

Diversification Opportunities for ATRenew and Fanhua

-0.01

Correlation Coefficient

ATRenew  Fanhua

Good diversification

The 3 months correlation between ATRenew and Fanhua is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc and ATRenew 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 ATRenew Inc DRC 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 ATRenew i.e., ATRenew and Fanhua go up and down completely randomly.

Pair Corralation between ATRenew and Fanhua

Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 1.02 times more return on investment than Fanhua. However, ATRenew is 1.02 times more volatile than Fanhua Inc. It trades about -0.07 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.1 per unit of risk. If you would invest  329.00  in ATRenew Inc DRC on September 30, 2024 and sell it today you would lose (25.00) from holding ATRenew Inc DRC or give up 7.6% of portfolio value over 90 days.

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

ATRenew Inc DRC  vs.  Fanhua Inc

ATRenew Inc DRC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fanhua Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanhua Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ATRenew and Fanhua

The main advantage of trading using opposite ATRenew and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRenew 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 ATRenew Inc DRC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..