Correlation Between Cheche Group and Digi International

Can any of the company-specific risk be diversified away by investing in both Cheche Group and Digi International 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 Digi International 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 Digi International, you can compare the effects of market volatilities on Cheche Group and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche Group and Digi International.

Diversification Opportunities for Cheche Group and Digi International

-0.03

Correlation Coefficient

Cheche Group  Digi International

Good diversification

The 3 months correlation between Cheche and Digi is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Cheche Group i.e., Cheche Group and Digi International go up and down completely randomly.

Pair Corralation between Cheche Group and Digi International

Considering the 90-day investment horizon Cheche Group Class is expected to generate 1.52 times more return on investment than Digi International. However, Cheche Group is 1.52 times more volatile than Digi International. It trades about 0.06 of its potential returns per unit of risk. Digi International is currently generating about 0.06 per unit of risk. If you would invest  79.00  in Cheche Group Class on October 26, 2024 and sell it today you would earn a total of  8.00  from holding Cheche Group Class or generate 10.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cheche Group Class  vs.  Digi International

Cheche Group Class

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Digi International

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Digi International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cheche Group and Digi International

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

The idea behind Cheche Group Class and Digi International 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.