Correlation Between Cheche Group and Verra Mobility

Can any of the company-specific risk be diversified away by investing in both Cheche Group and Verra Mobility 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 Verra Mobility 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 Verra Mobility Corp, you can compare the effects of market volatilities on Cheche Group and Verra Mobility 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 Verra Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche Group and Verra Mobility.

Diversification Opportunities for Cheche Group and Verra Mobility

0.01

Correlation Coefficient

Cheche Group  Verra Mobility

Significant diversification

The 3 months correlation between Cheche and Verra is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Verra Mobility Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verra Mobility Corp 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 Verra Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verra Mobility Corp has no effect on the direction of Cheche Group i.e., Cheche Group and Verra Mobility go up and down completely randomly.

Pair Corralation between Cheche Group and Verra Mobility

Considering the 90-day investment horizon Cheche Group Class is expected to generate 1.49 times more return on investment than Verra Mobility. However, Cheche Group is 1.49 times more volatile than Verra Mobility Corp. It trades about 0.17 of its potential returns per unit of risk. Verra Mobility Corp is currently generating about -0.23 per unit of risk. If you would invest  79.00  in Cheche Group Class on August 13, 2024 and sell it today you would earn a total of  11.00  from holding Cheche Group Class or generate 13.92% return on investment over 90 days.

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

Cheche Group Class  vs.  Verra Mobility Corp

Cheche Group Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 4 (%) 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.

Verra Mobility Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verra Mobility Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cheche Group and Verra Mobility

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

The idea behind Cheche Group Class and Verra Mobility Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.