Correlation Between Aware and Quhuo

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

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

Diversification Opportunities for Aware and Quhuo

0.41

Correlation Coefficient

Aware  Quhuo

Very weak diversification

The 3 months correlation between Aware and Quhuo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Quhuo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quhuo and Aware 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 Aware Inc are associated (or correlated) with Quhuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quhuo has no effect on the direction of Aware i.e., Aware and Quhuo go up and down completely randomly.

Pair Corralation between Aware and Quhuo

Given the investment horizon of 90 days Aware is expected to generate 12.76 times less return on investment than Quhuo. But when comparing it to its historical volatility, Aware Inc is 3.74 times less risky than Quhuo. It trades about 0.01 of its potential returns per unit of risk. Quhuo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Quhuo on September 28, 2024 and sell it today you would earn a total of  4.00  from holding Quhuo or generate 2.72% return on investment over 90 days.

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

Aware Inc  vs.  Quhuo

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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.

Quhuo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quhuo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, Quhuo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aware and Quhuo

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

The idea behind Aware Inc and Quhuo 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.