Correlation Between TuanChe ADR and Charter Communications

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

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

Diversification Opportunities for TuanChe ADR and Charter Communications

-0.86

Correlation Coefficient

TuanChe ADR  Charter Communications

Pay attention - limited upside

The 3 months correlation between TuanChe and Charter is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and TuanChe ADR 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 TuanChe ADR are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Charter Communications go up and down completely randomly.

Pair Corralation between TuanChe ADR and Charter Communications

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the Charter Communications. In addition to that, TuanChe ADR is 2.56 times more volatile than Charter Communications. It trades about -0.11 of its total potential returns per unit of risk. Charter Communications is currently generating about 0.08 per unit of volatility. If you would invest  33,903  in Charter Communications on September 12, 2024 and sell it today you would earn a total of  3,893  from holding Charter Communications or generate 11.48% return on investment over 90 days.

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

TuanChe ADR  vs.  Charter Communications

TuanChe ADR

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Charter Communications

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Charter Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TuanChe ADR and Charter Communications

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

The idea behind TuanChe ADR and Charter Communications 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 Anywhere module to track or share privately all of your investments from the convenience of any device.