Correlation Between Cheetah Mobile and Applied Opt

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

By analyzing existing cross correlation between Cheetah Mobile and Applied Opt, you can compare the effects of market volatilities on Cheetah Mobile and Applied Opt 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 Cheetah Mobile with a short position of Applied Opt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheetah Mobile and Applied Opt.

Diversification Opportunities for Cheetah Mobile and Applied Opt

0.67

Correlation Coefficient

Cheetah Mobile  Applied Opt

Poor diversification

The 3 months correlation between Cheetah and Applied is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt and Cheetah Mobile 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 Cheetah Mobile are associated (or correlated) with Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and Applied Opt go up and down completely randomly.

Pair Corralation between Cheetah Mobile and Applied Opt

Given the investment horizon of 90 days Cheetah Mobile is expected to generate 1.08 times less return on investment than Applied Opt. But when comparing it to its historical volatility, Cheetah Mobile is 1.59 times less risky than Applied Opt. It trades about 0.14 of its potential returns per unit of risk. Applied Opt is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,761  in Applied Opt on May 22, 2025 and sell it today you would earn a total of  516.00  from holding Applied Opt or generate 29.3% return on investment over 90 days.

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

Cheetah Mobile  vs.  Applied Opt

Cheetah Mobile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Mobile are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Cheetah Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Applied Opt

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Opt are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Applied Opt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheetah Mobile and Applied Opt

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

The idea behind Cheetah Mobile and Applied Opt 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.