Correlation Between TrueCar and Cheetah Mobile
Can any of the company-specific risk be diversified away by investing in both TrueCar 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 TrueCar and Cheetah Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrueCar and Cheetah Mobile, you can compare the effects of market volatilities on TrueCar 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 TrueCar with a short position of Cheetah Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueCar and Cheetah Mobile.
Diversification Opportunities for TrueCar and Cheetah Mobile
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TrueCar and Cheetah is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TrueCar and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile and TrueCar 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 TrueCar 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 TrueCar i.e., TrueCar and Cheetah Mobile go up and down completely randomly.
Pair Corralation between TrueCar and Cheetah Mobile
Given the investment horizon of 90 days TrueCar is expected to generate 2.7 times less return on investment than Cheetah Mobile. But when comparing it to its historical volatility, TrueCar is 1.31 times less risky than Cheetah Mobile. It trades about 0.15 of its potential returns per unit of risk. Cheetah Mobile is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 438.00 in Cheetah Mobile on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Cheetah Mobile or generate 31.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TrueCar vs. Cheetah Mobile
Performance |
| Timeline |
| TrueCar |
| Cheetah Mobile |
TrueCar and Cheetah Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TrueCar and Cheetah Mobile
The main advantage of trading using opposite TrueCar and Cheetah Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueCar 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.The idea behind TrueCar and Cheetah Mobile 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.| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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