Correlation Between Cheche Group and Iridium Communications

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

Diversification Opportunities for Cheche Group and Iridium Communications

0.0

Correlation Coefficient

Cheche Group  Iridium Communications

Pay attention - limited upside

The 3 months correlation between Cheche and Iridium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Cheche Group i.e., Cheche Group and Iridium Communications go up and down completely randomly.

Pair Corralation between Cheche Group and Iridium Communications

Considering the 90-day investment horizon Cheche Group Class is expected to generate 2.85 times more return on investment than Iridium Communications. However, Cheche Group is 2.85 times more volatile than Iridium Communications. It trades about 0.11 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.21 per unit of risk. If you would invest  86.00  in Cheche Group Class on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Cheche Group Class or generate 6.98% return on investment over 90 days.

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

Cheche Group Class  vs.  Iridium Communications

Cheche Group Class

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Iridium Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cheche Group and Iridium Communications

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

The idea behind Cheche Group Class and Iridium Communications 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.