Correlation Between Cheetah Mobile and EverQuote

Can any of the company-specific risk be diversified away by investing in both Cheetah Mobile and EverQuote 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 Cheetah Mobile and EverQuote into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cheetah Mobile and EverQuote Class A, you can compare the effects of market volatilities on Cheetah Mobile and EverQuote 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 Cheetah Mobile with a short position of EverQuote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheetah Mobile and EverQuote.

Diversification Opportunities for Cheetah Mobile and EverQuote

-0.61

Correlation Coefficient

Cheetah Mobile  EverQuote

Excellent diversification

The 3 months correlation between Cheetah and EverQuote is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and EverQuote Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverQuote Class A and Cheetah Mobile 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 Cheetah Mobile are associated (or correlated) with EverQuote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverQuote Class A has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and EverQuote go up and down completely randomly.

Pair Corralation between Cheetah Mobile and EverQuote

Given the investment horizon of 90 days Cheetah Mobile is expected to generate 1.14 times more return on investment than EverQuote. However, Cheetah Mobile is 1.14 times more volatile than EverQuote Class A. It trades about 0.08 of its potential returns per unit of risk. EverQuote Class A is currently generating about 0.08 per unit of risk. If you would invest  212.00  in Cheetah Mobile on August 31, 2024 and sell it today you would earn a total of  366.00  from holding Cheetah Mobile or generate 172.64% return on investment over 90 days.

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

Cheetah Mobile  vs.  EverQuote Class A

Cheetah Mobile

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Mobile are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cheetah Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Cheetah Mobile and EverQuote

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

The idea behind Cheetah Mobile and EverQuote Class A 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.