Correlation Between Cheche Group and Oaktree Acquisition

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

Diversification Opportunities for Cheche Group and Oaktree Acquisition

0.29

Correlation Coefficient

Cheche Group  Oaktree Acquisition

Modest diversification

The 3 months correlation between Cheche and Oaktree is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Oaktree Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Acquisition Corp 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 Oaktree Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Acquisition Corp has no effect on the direction of Cheche Group i.e., Cheche Group and Oaktree Acquisition go up and down completely randomly.

Pair Corralation between Cheche Group and Oaktree Acquisition

Considering the 90-day investment horizon Cheche Group Class is expected to generate 18.75 times more return on investment than Oaktree Acquisition. However, Cheche Group is 18.75 times more volatile than Oaktree Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. Oaktree Acquisition Corp is currently generating about 0.08 per unit of risk. If you would invest  86.00  in Cheche Group Class on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Cheche Group Class or generate 8.14% 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.  Oaktree Acquisition Corp

Cheche Group Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 3 (%) 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.

Oaktree Acquisition Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Acquisition Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Oaktree Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cheche Group and Oaktree Acquisition

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

The idea behind Cheche Group Class and Oaktree Acquisition Corp 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 CEOs Directory module to screen CEOs from public companies around the world.