Correlation Between TuanChe ADR and FingerMotion

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

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

Diversification Opportunities for TuanChe ADR and FingerMotion

-0.21

Correlation Coefficient

TuanChe ADR  FingerMotion

Very good diversification

The 3 months correlation between TuanChe and FingerMotion is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and FingerMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FingerMotion and TuanChe ADR 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 TuanChe ADR are associated (or correlated) with FingerMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FingerMotion has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and FingerMotion go up and down completely randomly.

Pair Corralation between TuanChe ADR and FingerMotion

Allowing for the 90-day total investment horizon TuanChe ADR is expected to generate 3.33 times less return on investment than FingerMotion. But when comparing it to its historical volatility, TuanChe ADR is 1.55 times less risky than FingerMotion. It trades about 0.23 of its potential returns per unit of risk. FingerMotion is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  149.00  in FingerMotion on February 16, 2025 and sell it today you would earn a total of  255.00  from holding FingerMotion or generate 171.14% return on investment over 90 days.

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

TuanChe ADR  vs.  FingerMotion

TuanChe ADR

Risk-Adjusted Performance

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 rather sound fundamental indicators, TuanChe ADR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FingerMotion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FingerMotion are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, FingerMotion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TuanChe ADR and FingerMotion

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

The idea behind TuanChe ADR and FingerMotion 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.