Correlation Between Cheche and Spotify Technology

Can any of the company-specific risk be diversified away by investing in both Cheche 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 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 and Spotify Technology SA, you can compare the effects of market volatilities on Cheche 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 with a short position of Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche and Spotify Technology.

Diversification Opportunities for Cheche and Spotify Technology

-0.86

Correlation Coefficient

Cheche  Spotify Technology

Pay attention - limited upside

The 3 months correlation between Cheche and Spotify is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group 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 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 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 i.e., Cheche and Spotify Technology go up and down completely randomly.

Pair Corralation between Cheche and Spotify Technology

Considering the 90-day investment horizon Cheche Group is expected to under-perform the Spotify Technology. In addition to that, Cheche is 1.86 times more volatile than Spotify Technology SA. It trades about -0.46 of its total potential returns per unit of risk. Spotify Technology SA is currently generating about 0.03 per unit of volatility. If you would invest  30,073  in Spotify Technology SA on March 10, 2024 and sell it today you would earn a total of  748.00  from holding Spotify Technology SA or generate 2.49% return on investment over 90 days.

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

Cheche Group  vs.  Spotify Technology SA

Cheche Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cheche Group 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 July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Spotify Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche and Spotify Technology

The main advantage of trading using opposite Cheche and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheche 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 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 Stocks Directory module to find actively traded stocks across global markets.