Correlation Between Reservoir Media and Cheche Group
Can any of the company-specific risk be diversified away by investing in both Reservoir Media 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 Reservoir Media and Cheche Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Cheche Group Class, you can compare the effects of market volatilities on Reservoir Media 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 Reservoir Media with a short position of Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Cheche Group.
Diversification Opportunities for Reservoir Media and Cheche Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Reservoir and Cheche is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media 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 Reservoir Media 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 Reservoir Media 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 Reservoir Media i.e., Reservoir Media and Cheche Group go up and down completely randomly.
Pair Corralation between Reservoir Media and Cheche Group
Given the investment horizon of 90 days Reservoir Media is expected to generate 10.68 times less return on investment than Cheche Group. But when comparing it to its historical volatility, Reservoir Media is 12.79 times less risky than Cheche Group. It trades about 0.03 of its potential returns per unit of risk. Cheche Group Class is currently generating about 0.02 of returns per unit of risk over similar time horizon. 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 |
Reservoir Media vs. Cheche Group Class
Performance |
| Timeline |
| Reservoir Media |
| Cheche Group Class |
Reservoir Media and Cheche Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Cheche Group
The main advantage of trading using opposite Reservoir Media and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media 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.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
| Cheche Group vs. Zhihu Inc ADR | Cheche Group vs. Edgewell Personal Care | Cheche Group vs. National CineMedia | Cheche Group vs. RBC Bearings Incorporated |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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