Correlation Between Cheetah Mobile and Genius Sports

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

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

Diversification Opportunities for Cheetah Mobile and Genius Sports

0.31

Correlation Coefficient

Cheetah Mobile  Genius Sports

Weak diversification

The 3 months correlation between Cheetah and Genius is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and Genius Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Sports 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 Genius Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Sports has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and Genius Sports go up and down completely randomly.

Pair Corralation between Cheetah Mobile and Genius Sports

Given the investment horizon of 90 days Cheetah Mobile is expected to generate 1.62 times more return on investment than Genius Sports. However, Cheetah Mobile is 1.62 times more volatile than Genius Sports. It trades about 0.16 of its potential returns per unit of risk. Genius Sports is currently generating about 0.17 per unit of risk. If you would invest  363.00  in Cheetah Mobile on September 2, 2024 and sell it today you would earn a total of  215.00  from holding Cheetah Mobile or generate 59.23% return on investment over 90 days.

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

Cheetah Mobile  vs.  Genius Sports

Cheetah Mobile

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Mobile are ranked lower than 12 (%) 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.

Genius Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Genius Sports demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheetah Mobile and Genius Sports

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

The idea behind Cheetah Mobile and Genius Sports 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .