Correlation Between Cars and TuanChe ADR
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and TuanChe ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and TuanChe ADR, you can compare the effects of market volatilities on Cars 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 Cars with a short position of TuanChe ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and TuanChe ADR.
Diversification Opportunities for Cars and TuanChe ADR
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cars and TuanChe is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and TuanChe ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuanChe ADR and Cars 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 Cars Inc 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 Cars i.e., Cars and TuanChe ADR go up and down completely randomly.
Pair Corralation between Cars and TuanChe ADR
Given the investment horizon of 90 days Cars Inc is expected to under-perform the TuanChe ADR. But the stock apears to be less risky and, when comparing its historical volatility, Cars Inc is 2.49 times less risky than TuanChe ADR. The stock trades about -0.06 of its potential returns per unit of risk. The TuanChe ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,200 in TuanChe ADR on August 18, 2025 and sell it today you would earn a total of 631.00 from holding TuanChe ADR or generate 52.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. TuanChe ADR
Performance |
| Timeline |
| Cars Inc |
| TuanChe ADR |
Cars and TuanChe ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and TuanChe ADR
The main advantage of trading using opposite Cars and TuanChe ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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 Cars Inc 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.| TuanChe ADR vs. MoneyHero Limited Class | TuanChe ADR vs. Zedge Inc | TuanChe ADR vs. Courtside Group, Common | TuanChe ADR vs. Comscore |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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