Correlation Between Bentley Systems and Full Truck

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

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

Diversification Opportunities for Bentley Systems and Full Truck

-0.36

Correlation Coefficient

Bentley Systems  Full Truck

Very good diversification

The 3 months correlation between Bentley and Full is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and Full Truck Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Full Truck Alliance and Bentley Systems 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 Bentley Systems are associated (or correlated) with Full Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Full Truck Alliance has no effect on the direction of Bentley Systems i.e., Bentley Systems and Full Truck go up and down completely randomly.

Pair Corralation between Bentley Systems and Full Truck

Considering the 90-day investment horizon Bentley Systems is expected to under-perform the Full Truck. But the stock apears to be less risky and, when comparing its historical volatility, Bentley Systems is 2.72 times less risky than Full Truck. The stock trades about -0.28 of its potential returns per unit of risk. The Full Truck Alliance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,026  in Full Truck Alliance on October 5, 2024 and sell it today you would earn a total of  56.00  from holding Full Truck Alliance or generate 5.46% return on investment over 90 days.

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

Bentley Systems  vs.  Full Truck Alliance

Bentley Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bentley Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bentley Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Full Truck Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Full Truck may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bentley Systems and Full Truck

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

The idea behind Bentley Systems and Full Truck Alliance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.