Correlation Between Cheche Group and Universal Insurance

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

Diversification Opportunities for Cheche Group and Universal Insurance

0.5

Correlation Coefficient

Cheche Group  Universal Insurance

Very weak diversification

The 3 months correlation between Cheche and Universal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Cheche Group i.e., Cheche Group and Universal Insurance go up and down completely randomly.

Pair Corralation between Cheche Group and Universal Insurance

Considering the 90-day investment horizon Cheche Group Class is expected to generate 3.02 times more return on investment than Universal Insurance. However, Cheche Group is 3.02 times more volatile than Universal Insurance Holdings. It trades about 0.09 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 per unit of risk. If you would invest  77.00  in Cheche Group Class on December 19, 2024 and sell it today you would earn a total of  18.00  from holding Cheche Group Class or generate 23.38% return on investment over 90 days.

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

Cheche Group Class  vs.  Universal Insurance Holdings

Cheche Group Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 7 (%) 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.

Universal Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cheche Group and Universal Insurance

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

The idea behind Cheche Group Class and Universal Insurance Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.