Correlation Between NYSE Composite and Cheetah Mobile
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Cheetah Mobile 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 NYSE Composite and Cheetah Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cheetah Mobile, you can compare the effects of market volatilities on NYSE Composite and Cheetah Mobile 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 NYSE Composite with a short position of Cheetah Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cheetah Mobile.
Diversification Opportunities for NYSE Composite and Cheetah Mobile
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Cheetah is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile and NYSE Composite 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 NYSE Composite are associated (or correlated) with Cheetah Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Mobile has no effect on the direction of NYSE Composite i.e., NYSE Composite and Cheetah Mobile go up and down completely randomly.
Pair Corralation between NYSE Composite and Cheetah Mobile
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.83 times less return on investment than Cheetah Mobile. But when comparing it to its historical volatility, NYSE Composite is 6.43 times less risky than Cheetah Mobile. It trades about 0.24 of its potential returns per unit of risk. Cheetah Mobile is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 446.00 in Cheetah Mobile on August 28, 2024 and sell it today you would earn a total of 53.00 from holding Cheetah Mobile or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Cheetah Mobile
Performance |
| Timeline |
NYSE Composite and Cheetah Mobile Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cheetah Mobile
Pair trading matchups for Cheetah Mobile
Pair Trading with NYSE Composite and Cheetah Mobile
The main advantage of trading using opposite NYSE Composite and Cheetah Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Cheetah Mobile 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 Cheetah Mobile will offset losses from the drop in Cheetah Mobile's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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