Correlation Between MediaAlpha and TuanChe ADR

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

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

Diversification Opportunities for MediaAlpha and TuanChe ADR

0.67

Correlation Coefficient

MediaAlpha  TuanChe ADR

Poor diversification

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

Pair Corralation between MediaAlpha and TuanChe ADR

Considering the 90-day investment horizon MediaAlpha is expected to generate 0.84 times more return on investment than TuanChe ADR. However, MediaAlpha is 1.19 times less risky than TuanChe ADR. It trades about -0.13 of its potential returns per unit of risk. TuanChe ADR is currently generating about -0.12 per unit of risk. If you would invest  1,121  in MediaAlpha on January 13, 2025 and sell it today you would lose (371.00) from holding MediaAlpha or give up 33.1% of portfolio value over 90 days.

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

MediaAlpha  vs.  TuanChe ADR

MediaAlpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days MediaAlpha 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 fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TuanChe ADR

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MediaAlpha and TuanChe ADR

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

The idea behind MediaAlpha and TuanChe ADR 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.