Correlation Between Cheetah Mobile and TrueCar
Can any of the company-specific risk be diversified away by investing in both Cheetah Mobile and TrueCar 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 Cheetah Mobile and TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheetah Mobile and TrueCar, you can compare the effects of market volatilities on Cheetah Mobile and TrueCar 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 Cheetah Mobile with a short position of TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheetah Mobile and TrueCar.
Diversification Opportunities for Cheetah Mobile and TrueCar
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cheetah and TrueCar is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and Cheetah Mobile 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 Cheetah Mobile are associated (or correlated) with TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and TrueCar go up and down completely randomly.
Pair Corralation between Cheetah Mobile and TrueCar
Given the investment horizon of 90 days Cheetah Mobile is expected to under-perform the TrueCar. In addition to that, Cheetah Mobile is 1.66 times more volatile than TrueCar. It trades about -0.07 of its total potential returns per unit of risk. TrueCar is currently generating about -0.03 per unit of volatility. If you would invest 352.00 in TrueCar on November 5, 2024 and sell it today you would lose (8.00) from holding TrueCar or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheetah Mobile vs. TrueCar
Performance |
| Timeline |
| Cheetah Mobile |
| TrueCar |
Cheetah Mobile and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheetah Mobile and TrueCar
The main advantage of trading using opposite Cheetah Mobile and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheetah Mobile position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar's long position.| Cheetah Mobile vs. Tuniu Corp | Cheetah Mobile vs. Yirendai | Cheetah Mobile vs. Xunlei Ltd Adr | Cheetah Mobile vs. Phoenix New Media |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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