Correlation Between RDE, Common and Cheetah Mobile

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

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

Diversification Opportunities for RDE, Common and Cheetah Mobile

-0.56

Correlation Coefficient

RDE, Common  Cheetah Mobile

Excellent diversification

The 3 months correlation between RDE, and Cheetah is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding RDE, Common Stock and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile and RDE, Common 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 RDE, Common Stock are associated (or correlated) with Cheetah Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Mobile has no effect on the direction of RDE, Common i.e., RDE, Common and Cheetah Mobile go up and down completely randomly.

Pair Corralation between RDE, Common and Cheetah Mobile

Given the investment horizon of 90 days RDE, Common Stock is expected to generate 0.84 times more return on investment than Cheetah Mobile. However, RDE, Common Stock is 1.19 times less risky than Cheetah Mobile. It trades about 0.58 of its potential returns per unit of risk. Cheetah Mobile is currently generating about 0.21 per unit of risk. If you would invest  133.00  in RDE, Common Stock on September 4, 2024 and sell it today you would earn a total of  9.00  from holding RDE, Common Stock or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	14.29%
Values	Daily Returns

RDE, Common Stock  vs.  Cheetah Mobile

RDE, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RDE, Common Stock 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cheetah Mobile

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Mobile are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cheetah Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RDE, Common and Cheetah Mobile

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

The idea behind RDE, Common Stock and Cheetah Mobile 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.