Correlation Between Cheche Group and Safety Shot

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

Diversification Opportunities for Cheche Group and Safety Shot

-0.31

Correlation Coefficient

Cheche Group  Safety Shot

Very good diversification

The 3 months correlation between Cheche and Safety is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Cheche Group i.e., Cheche Group and Safety Shot go up and down completely randomly.

Pair Corralation between Cheche Group and Safety Shot

Considering the 90-day investment horizon Cheche Group is expected to generate 18.49 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Cheche Group Class is 5.87 times less risky than Safety Shot. It trades about 0.04 of its potential returns per unit of risk. Safety Shot is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Safety Shot on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Safety Shot or generate 10.53% 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.  Safety Shot

Cheche Group Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Cheche Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Safety Shot

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche Group and Safety Shot

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

The idea behind Cheche Group Class and Safety Shot 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.