Correlation Between TuanChe ADR and Pop Culture

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

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

Diversification Opportunities for TuanChe ADR and Pop Culture

-0.17

Correlation Coefficient

TuanChe ADR  Pop Culture

Good diversification

The 3 months correlation between TuanChe and Pop is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Pop Culture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pop Culture Group 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 Pop Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pop Culture Group has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Pop Culture go up and down completely randomly.

Pair Corralation between TuanChe ADR and Pop Culture

Allowing for the 90-day total investment horizon TuanChe ADR is expected to generate 1.71 times more return on investment than Pop Culture. However, TuanChe ADR is 1.71 times more volatile than Pop Culture Group. It trades about -0.01 of its potential returns per unit of risk. Pop Culture Group is currently generating about -0.25 per unit of risk. If you would invest  177.00  in TuanChe ADR on February 2, 2024 and sell it today you would lose (14.00) from holding TuanChe ADR or give up 7.91% of portfolio value over 90 days.

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

TuanChe ADR  vs.  Pop Culture Group

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 rather sound fundamental indicators, TuanChe ADR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pop Culture Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pop Culture Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Pop Culture reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TuanChe ADR and Pop Culture

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

The idea behind TuanChe ADR and Pop Culture Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.