Correlation Between Outbrain and TuanChe ADR

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

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

Diversification Opportunities for Outbrain and TuanChe ADR

0.76

Correlation Coefficient

Outbrain  TuanChe ADR

Poor diversification

The 3 months correlation between Outbrain and TuanChe is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and TuanChe ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuanChe ADR and Outbrain 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 Outbrain are associated (or correlated) with TuanChe ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TuanChe ADR has no effect on the direction of Outbrain i.e., Outbrain and TuanChe ADR go up and down completely randomly.

Pair Corralation between Outbrain and TuanChe ADR

Allowing for the 90-day total investment horizon Outbrain is expected to under-perform the TuanChe ADR. But the stock apears to be less risky and, when comparing its historical volatility, Outbrain is 1.31 times less risky than TuanChe ADR. The stock trades about -0.25 of its potential returns per unit of risk. The TuanChe ADR is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  113.00  in TuanChe ADR on December 28, 2024 and sell it today you would lose (40.00) from holding TuanChe ADR or give up 35.4% of portfolio value over 90 days.

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

Outbrain  vs.  TuanChe ADR

Outbrain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outbrain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TuanChe ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Outbrain and TuanChe ADR

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

The idea behind Outbrain and TuanChe ADR 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.