Correlation Between BuzzFeed and Cheetah Mobile

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

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

Diversification Opportunities for BuzzFeed and Cheetah Mobile

0.84

Correlation Coefficient

BuzzFeed  Cheetah Mobile

Very poor diversification

The 3 months correlation between BuzzFeed and Cheetah is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BuzzFeed and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile and BuzzFeed 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 BuzzFeed 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 BuzzFeed i.e., BuzzFeed and Cheetah Mobile go up and down completely randomly.

Pair Corralation between BuzzFeed and Cheetah Mobile

Given the investment horizon of 90 days BuzzFeed is expected to under-perform the Cheetah Mobile. In addition to that, BuzzFeed is 1.05 times more volatile than Cheetah Mobile. It trades about -0.06 of its total potential returns per unit of risk. Cheetah Mobile is currently generating about 0.02 per unit of volatility. If you would invest  424.00  in Cheetah Mobile on February 15, 2025 and sell it today you would lose (18.00) from holding Cheetah Mobile or give up 4.25% of portfolio value over 90 days.

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

BuzzFeed  vs.  Cheetah Mobile

BuzzFeed

Risk-Adjusted Performance

Very Weak

Over the last 90 days BuzzFeed 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cheetah Mobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheetah Mobile 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 very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BuzzFeed and Cheetah Mobile

The main advantage of trading using opposite BuzzFeed and Cheetah Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BuzzFeed 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 BuzzFeed 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.