Correlation Between Cheche Group and Bridger Aerospace

Can any of the company-specific risk be diversified away by investing in both Cheche Group and Bridger Aerospace 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 Cheche Group and Bridger Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cheche Group Class and Bridger Aerospace Group, you can compare the effects of market volatilities on Cheche Group and Bridger Aerospace 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 Cheche Group with a short position of Bridger Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche Group and Bridger Aerospace.

Diversification Opportunities for Cheche Group and Bridger Aerospace

0.21

Correlation Coefficient

Cheche Group  Bridger Aerospace

Modest diversification

The 3 months correlation between Cheche and Bridger is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Cheche Group 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 Cheche Group Class are associated (or correlated) with Bridger Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridger Aerospace has no effect on the direction of Cheche Group i.e., Cheche Group and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Cheche Group and Bridger Aerospace

Considering the 90-day investment horizon Cheche Group is expected to generate 102.99 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Cheche Group Class is 9.55 times less risky than Bridger Aerospace. It trades about 0.03 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  5.10  in Bridger Aerospace Group on October 22, 2024 and sell it today you would earn a total of  15.90  from holding Bridger Aerospace Group or generate 311.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cheche Group Class  vs.  Bridger Aerospace Group

Cheche Group Class

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cheche Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bridger Aerospace

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche Group and Bridger Aerospace

The main advantage of trading using opposite Cheche Group and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheche Group position performs unexpectedly, Bridger Aerospace 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 Bridger Aerospace will offset losses from the drop in Bridger Aerospace's long position.

The idea behind Cheche Group Class and Bridger Aerospace Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.