Correlation Between Cheetah Mobile and Tuniu Corp

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

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

Diversification Opportunities for Cheetah Mobile and Tuniu Corp

0.19

Correlation Coefficient

Cheetah Mobile  Tuniu Corp

Average diversification

The 3 months correlation between Cheetah and Tuniu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp 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 Tuniu Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuniu Corp has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and Tuniu Corp go up and down completely randomly.

Pair Corralation between Cheetah Mobile and Tuniu Corp

Given the investment horizon of 90 days Cheetah Mobile is expected to under-perform the Tuniu Corp. In addition to that, Cheetah Mobile is 1.99 times more volatile than Tuniu Corp. It trades about 0.0 of its total potential returns per unit of risk. Tuniu Corp is currently generating about 0.11 per unit of volatility. If you would invest  93.00  in Tuniu Corp on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Tuniu Corp or generate 16.13% return on investment over 90 days.

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

Cheetah Mobile  vs.  Tuniu Corp

Cheetah Mobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheetah Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Cheetah Mobile is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Tuniu Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tuniu Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tuniu Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheetah Mobile and Tuniu Corp

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

The idea behind Cheetah Mobile and Tuniu Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.