Correlation Between Sapiens International and Cheche Group

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

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

Diversification Opportunities for Sapiens International and Cheche Group

-0.41

Correlation Coefficient

Sapiens International  Cheche Group

Very good diversification

The 3 months correlation between Sapiens and Cheche is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International 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 Sapiens International 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 Sapiens International 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 Sapiens International i.e., Sapiens International and Cheche Group go up and down completely randomly.

Pair Corralation between Sapiens International and Cheche Group

Given the investment horizon of 90 days Sapiens International is expected to generate 10.84 times less return on investment than Cheche Group. But when comparing it to its historical volatility, Sapiens International is 13.22 times less risky than Cheche Group. It trades about 0.03 of its potential returns per unit of risk. Cheche Group Class is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,038  in Cheche Group Class on October 23, 2024 and sell it today you would lose (950.99) from holding Cheche Group Class or give up 91.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.72%
Values	Daily Returns

Sapiens International  vs.  Cheche Group Class

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cheche Group Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Cheche Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sapiens International and Cheche Group

The main advantage of trading using opposite Sapiens International and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International 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.

The idea behind Sapiens International and Cheche Group Class 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.