Correlation Between Shake Shack and Cheche Group
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Cheche Group 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 Shake Shack and Cheche Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Cheche Group Class, you can compare the effects of market volatilities on Shake Shack and Cheche Group 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 Shake Shack with a short position of Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Cheche Group.
Diversification Opportunities for Shake Shack and Cheche Group
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and Cheche is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class and Shake Shack 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 Shake Shack are associated (or correlated) with Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Shake Shack i.e., Shake Shack and Cheche Group go up and down completely randomly.
Pair Corralation between Shake Shack and Cheche Group
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Cheche Group. But the stock apears to be less risky and, when comparing its historical volatility, Shake Shack is 1.64 times less risky than Cheche Group. The stock trades about -0.16 of its potential returns per unit of risk. The Cheche Group Class is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Cheche Group Class on December 18, 2024 and sell it today you would earn a total of 21.00 from holding Cheche Group Class or generate 26.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shake Shack vs. Cheche Group Class
Performance |
Timeline |
Shake Shack |
Cheche Group Class |
Shake Shack and Cheche Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shake Shack and Cheche Group
The main advantage of trading using opposite Shake Shack and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Cheche Group 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 Cheche Group will offset losses from the drop in Cheche Group's long position.Shake Shack vs. Dominos Pizza Common | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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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 .
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