Correlation Between Cheche Group and United Natural

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

Diversification Opportunities for Cheche Group and United Natural

0.06

Correlation Coefficient

Cheche Group  United Natural

Significant diversification

The 3 months correlation between Cheche and United is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Cheche Group i.e., Cheche Group and United Natural go up and down completely randomly.

Pair Corralation between Cheche Group and United Natural

Considering the 90-day investment horizon Cheche Group is expected to generate 2.39 times less return on investment than United Natural. But when comparing it to its historical volatility, Cheche Group Class is 1.02 times less risky than United Natural. It trades about 0.06 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,087  in United Natural Foods on October 26, 2024 and sell it today you would earn a total of  670.00  from holding United Natural Foods or generate 32.1% return on investment over 90 days.

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

Cheche Group Class  vs.  United Natural Foods

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.

United Natural Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche Group and United Natural

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

The idea behind Cheche Group Class and United Natural Foods 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.