Correlation Between Cheche Group and Spotify Technology

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

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

Diversification Opportunities for Cheche Group and Spotify Technology

-0.6

Correlation Coefficient

Cheche Group  Spotify Technology

Excellent diversification

The 3 months correlation between Cheche and Spotify is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology and Cheche Group 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 Cheche Group Class are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Cheche Group i.e., Cheche Group and Spotify Technology go up and down completely randomly.

Pair Corralation between Cheche Group and Spotify Technology

Considering the 90-day investment horizon Cheche Group Class is expected to generate 10.91 times more return on investment than Spotify Technology. However, Cheche Group is 10.91 times more volatile than Spotify Technology SA. It trades about 0.02 of its potential returns per unit of risk. Spotify Technology SA is currently generating about 0.14 per unit of risk. If you would invest  1,070  in Cheche Group Class on April 18, 2025 and sell it today you would lose (990.00) from holding Cheche Group Class or give up 92.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.18%
Values	Daily Returns

Cheche Group Class  vs.  Spotify Technology SA

Cheche Group Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheche Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Spotify Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche Group and Spotify Technology

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

The idea behind Cheche Group Class and Spotify Technology SA 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.