Correlation Between TuanChe ADR and Alphabet

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

By analyzing existing cross correlation between TuanChe ADR and Alphabet Inc Class A, you can compare the effects of market volatilities on TuanChe ADR and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of TuanChe ADR and Alphabet.

Diversification Opportunities for TuanChe ADR and Alphabet

0.14

Correlation Coefficient

TuanChe ADR  Alphabet

Average diversification

The 3 months correlation between TuanChe and Alphabet is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Alphabet go up and down completely randomly.

Pair Corralation between TuanChe ADR and Alphabet

Allowing for the 90-day total investment horizon TuanChe ADR is expected to generate 2.92 times more return on investment than Alphabet. However, TuanChe ADR is 2.92 times more volatile than Alphabet Inc Class A. It trades about 0.02 of its potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.04 per unit of risk. If you would invest  93.00  in TuanChe ADR on November 27, 2024 and sell it today you would lose (4.00) from holding TuanChe ADR or give up 4.3% of portfolio value over 90 days.

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

TuanChe ADR  vs.  Alphabet Inc Class A

TuanChe ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TuanChe ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, TuanChe ADR may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Alphabet Class A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Alphabet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TuanChe ADR and Alphabet

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

The idea behind TuanChe ADR and Alphabet Inc Class A 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.