Correlation Between CAPITAL and Cheche Group

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

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

Diversification Opportunities for CAPITAL and Cheche Group

0.01

Correlation Coefficient

CAPITAL  Cheche Group

Significant diversification

The 3 months correlation between CAPITAL and Cheche is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CAPITAL ONE FINANCIAL 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 CAPITAL 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 CAPITAL ONE FINANCIAL 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 CAPITAL i.e., CAPITAL and Cheche Group go up and down completely randomly.

Pair Corralation between CAPITAL and Cheche Group

Assuming the 90 days trading horizon CAPITAL ONE FINANCIAL is expected to under-perform the Cheche Group. But the bond apears to be less risky and, when comparing its historical volatility, CAPITAL ONE FINANCIAL is 65.9 times less risky than Cheche Group. The bond trades about 0.0 of its potential returns per unit of risk. The Cheche Group Class is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,036  in Cheche Group Class on October 9, 2024 and sell it today you would lose (941.00) from holding Cheche Group Class or give up 90.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.07%
Values	Daily Returns

CAPITAL ONE FINANCIAL  vs.  Cheche Group Class

CAPITAL ONE FINANCIAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAPITAL ONE FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAPITAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cheche Group Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAPITAL and Cheche Group

The main advantage of trading using opposite CAPITAL and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAPITAL 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 CAPITAL ONE FINANCIAL 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.