Correlation Between GMO Internet and Cheche Group
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Cheche Group 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 GMO Internet and Cheche Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Cheche Group Class, you can compare the effects of market volatilities on GMO Internet and Cheche Group 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 GMO Internet with a short position of Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Cheche Group.
Diversification Opportunities for GMO Internet and Cheche Group
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMO and Cheche is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class and GMO Internet 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 GMO Internet are associated (or correlated) with Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of GMO Internet i.e., GMO Internet and Cheche Group go up and down completely randomly.
Pair Corralation between GMO Internet and Cheche Group
Assuming the 90 days horizon GMO Internet is expected to generate 0.34 times more return on investment than Cheche Group. However, GMO Internet is 2.94 times less risky than Cheche Group. It trades about 0.0 of its potential returns per unit of risk. Cheche Group Class is currently generating about -0.06 per unit of risk. If you would invest 1,781 in GMO Internet on October 12, 2024 and sell it today you would lose (101.00) from holding GMO Internet or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
GMO Internet vs. Cheche Group Class
Performance |
| Timeline |
| GMO Internet |
| Cheche Group Class |
GMO Internet and Cheche Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Cheche Group
The main advantage of trading using opposite GMO Internet and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Cheche Group 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 Cheche Group will offset losses from the drop in Cheche Group's long position.| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
| Cheche Group vs. Alignment Healthcare LLC | Cheche Group vs. Emerson Electric | Cheche Group vs. Western Acquisition Ventures | Cheche Group vs. Highway Holdings Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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