Correlation Between Cheche Group and WuXi AppTec

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

Diversification Opportunities for Cheche Group and WuXi AppTec

0.7

Correlation Coefficient

Cheche Group  WuXi AppTec

Poor diversification

The 3 months correlation between Cheche and WuXi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Cheche Group i.e., Cheche Group and WuXi AppTec go up and down completely randomly.

Pair Corralation between Cheche Group and WuXi AppTec

Considering the 90-day investment horizon Cheche Group Class is expected to generate 2.58 times more return on investment than WuXi AppTec. However, Cheche Group is 2.58 times more volatile than WuXi AppTec Co. It trades about 0.09 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.08 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	Significant
Accuracy	96.72%
Values	Daily Returns

Cheche Group Class  vs.  WuXi AppTec Co

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 fragile fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

WuXi AppTec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, WuXi AppTec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cheche Group and WuXi AppTec

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

The idea behind Cheche Group Class and WuXi AppTec Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.