Correlation Between TuanChe ADR and Gaia

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Can any of the company-specific risk be diversified away by investing in both TuanChe ADR and Gaia 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 TuanChe ADR and Gaia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TuanChe ADR and Gaia Inc, you can compare the effects of market volatilities on TuanChe ADR and Gaia 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 TuanChe ADR with a short position of Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TuanChe ADR and Gaia.

Diversification Opportunities for TuanChe ADR and Gaia

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between TuanChe and Gaia is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia Inc and TuanChe ADR 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 TuanChe ADR are associated (or correlated) with Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Gaia go up and down completely randomly.

Pair Corralation between TuanChe ADR and Gaia

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the Gaia. In addition to that, TuanChe ADR is 2.43 times more volatile than Gaia Inc. It trades about -0.22 of its total potential returns per unit of risk. Gaia Inc is currently generating about 0.18 per unit of volatility. If you would invest  561.00  in Gaia Inc on August 28, 2024 and sell it today you would earn a total of  64.00  from holding Gaia Inc or generate 11.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

TuanChe ADR  vs.  Gaia Inc

 Performance 
       Timeline  
TuanChe ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Gaia Inc 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gaia Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Gaia sustained solid returns over the last few months and may actually be approaching a breakup point.

TuanChe ADR and Gaia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TuanChe ADR and Gaia

The main advantage of trading using opposite TuanChe ADR and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TuanChe ADR position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia's long position.
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The idea behind TuanChe ADR and Gaia Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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