Correlation Between Smart Share and Tuniu Corp

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

By analyzing existing cross correlation between Smart Share Global and Tuniu Corp, you can compare the effects of market volatilities on Smart Share 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 Smart Share with a short position of Tuniu Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Tuniu Corp.

Diversification Opportunities for Smart Share and Tuniu Corp

0.69

Correlation Coefficient

Smart Share  Tuniu Corp

Poor diversification

The 3 months correlation between Smart and Tuniu is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and Smart Share 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 Smart Share Global 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 Smart Share i.e., Smart Share and Tuniu Corp go up and down completely randomly.

Pair Corralation between Smart Share and Tuniu Corp

Allowing for the 90-day total investment horizon Smart Share Global is expected to under-perform the Tuniu Corp. But the stock apears to be less risky and, when comparing its historical volatility, Smart Share Global is 1.1 times less risky than Tuniu Corp. The stock trades about 0.0 of its potential returns per unit of risk. The Tuniu Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Tuniu Corp on September 22, 2024 and sell it today you would lose (85.00) from holding Tuniu Corp or give up 46.45% of portfolio value over 90 days.

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

Smart Share Global  vs.  Tuniu Corp

Smart Share Global

Risk-Adjusted Performance

10 of 100

OK

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

Tuniu Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tuniu Corp are ranked lower than 5 (%) 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 Smart Share and Tuniu Corp

The main advantage of trading using opposite Smart Share and Tuniu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Share 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 Smart Share Global 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.