Correlation Between Cheche Group and NL Industries
Can any of the company-specific risk be diversified away by investing in both Cheche Group and NL Industries 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 Cheche Group and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheche Group Class and NL Industries, you can compare the effects of market volatilities on Cheche Group and NL Industries 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 Cheche Group with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche Group and NL Industries.
Diversification Opportunities for Cheche Group and NL Industries
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheche and NL Industries is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and Cheche Group 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 Cheche Group Class are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Cheche Group i.e., Cheche Group and NL Industries go up and down completely randomly.
Pair Corralation between Cheche Group and NL Industries
Considering the 90-day investment horizon Cheche Group Class is expected to generate 10.15 times more return on investment than NL Industries. However, Cheche Group is 10.15 times more volatile than NL Industries. It trades about 0.02 of its potential returns per unit of risk. NL Industries is currently generating about 0.04 per unit of risk. If you would invest 1,036 in Cheche Group Class on November 2, 2024 and sell it today you would lose (947.45) from holding Cheche Group Class or give up 91.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.7% |
| Values | Daily Returns |
Cheche Group Class vs. NL Industries
Performance |
| Timeline |
| Cheche Group Class |
| NL Industries |
Cheche Group and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheche Group and NL Industries
The main advantage of trading using opposite Cheche Group and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheche Group position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Cheche Group vs. Zhihu Inc ADR | Cheche Group vs. Edgewell Personal Care | Cheche Group vs. National CineMedia | Cheche Group vs. RBC Bearings Incorporated |
| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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