Correlation Between Cheetah Mobile and FaZe Holdings

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

By analyzing existing cross correlation between Cheetah Mobile and FaZe Holdings, you can compare the effects of market volatilities on Cheetah Mobile and FaZe Holdings 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 FaZe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheetah Mobile and FaZe Holdings.

Diversification Opportunities for Cheetah Mobile and FaZe Holdings

-0.26

Correlation Coefficient

Cheetah Mobile  FaZe Holdings

Very good diversification

The 3 months correlation between Cheetah and FaZe is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and FaZe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FaZe Holdings 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 FaZe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FaZe Holdings has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and FaZe Holdings go up and down completely randomly.

Pair Corralation between Cheetah Mobile and FaZe Holdings

If you would invest  363.00  in Cheetah Mobile on August 31, 2024 and sell it today you would earn a total of  154.00  from holding Cheetah Mobile or generate 42.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Cheetah Mobile  vs.  FaZe Holdings

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.

FaZe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FaZe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FaZe Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cheetah Mobile and FaZe Holdings

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

The idea behind Cheetah Mobile and FaZe 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.