Correlation Between TuanChe ADR and Phoenix New

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

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

Diversification Opportunities for TuanChe ADR and Phoenix New

0.86

Correlation Coefficient

TuanChe ADR  Phoenix New

Very poor diversification

The 3 months correlation between TuanChe and Phoenix is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media 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 Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Phoenix New go up and down completely randomly.

Pair Corralation between TuanChe ADR and Phoenix New

Allowing for the 90-day total investment horizon TuanChe ADR is expected to generate 1.46 times more return on investment than Phoenix New. However, TuanChe ADR is 1.46 times more volatile than Phoenix New Media. It trades about 0.14 of its potential returns per unit of risk. Phoenix New Media is currently generating about 0.0 per unit of risk. If you would invest  78.00  in TuanChe ADR on September 18, 2024 and sell it today you would earn a total of  13.47  from holding TuanChe ADR or generate 17.27% return on investment over 90 days.

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

TuanChe ADR  vs.  Phoenix New Media

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

Phoenix New Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix New Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phoenix New is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TuanChe ADR and Phoenix New

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

The idea behind TuanChe ADR and Phoenix New Media 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.