Correlation Between Enfusion and Quhuo

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

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

Diversification Opportunities for Enfusion and Quhuo

-0.29

Correlation Coefficient

Enfusion  Quhuo

Very good diversification

The 3 months correlation between Enfusion and Quhuo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Quhuo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quhuo and Enfusion 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 Enfusion 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 Enfusion i.e., Enfusion and Quhuo go up and down completely randomly.

Pair Corralation between Enfusion and Quhuo

Given the investment horizon of 90 days Enfusion is expected to generate 0.94 times more return on investment than Quhuo. However, Enfusion is 1.06 times less risky than Quhuo. It trades about -0.04 of its potential returns per unit of risk. Quhuo is currently generating about -0.11 per unit of risk. If you would invest  1,056  in Enfusion on October 11, 2024 and sell it today you would lose (27.00) from holding Enfusion or give up 2.56% of portfolio value over 90 days.

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

Enfusion  vs.  Quhuo

Enfusion

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Quhuo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quhuo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Quhuo is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enfusion and Quhuo

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

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.