Correlation Between Fiverr International and TuanChe ADR

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

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

Diversification Opportunities for Fiverr International and TuanChe ADR

-0.79

Correlation Coefficient

Fiverr International  TuanChe ADR

Pay attention - limited upside

The 3 months correlation between Fiverr and TuanChe is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and TuanChe ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuanChe ADR and Fiverr International 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 Fiverr International 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 Fiverr International i.e., Fiverr International and TuanChe ADR go up and down completely randomly.

Pair Corralation between Fiverr International and TuanChe ADR

Given the investment horizon of 90 days Fiverr International is expected to generate 0.6 times more return on investment than TuanChe ADR. However, Fiverr International is 1.66 times less risky than TuanChe ADR. It trades about 0.1 of its potential returns per unit of risk. TuanChe ADR is currently generating about -0.03 per unit of risk. If you would invest  2,221  in Fiverr International on September 28, 2024 and sell it today you would earn a total of  1,053  from holding Fiverr International or generate 47.41% return on investment over 90 days.

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

Fiverr International  vs.  TuanChe ADR

Fiverr International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fiverr International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fiverr International reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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.

Pair Trading with Fiverr International and TuanChe ADR

The main advantage of trading using opposite Fiverr International and TuanChe ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiverr International 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 Fiverr International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.