Correlation Between Gitlab and Freshworks

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

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

Diversification Opportunities for Gitlab and Freshworks

0.9

Correlation Coefficient

Gitlab  Freshworks

Almost no diversification

The 3 months correlation between Gitlab and Freshworks is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and Freshworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshworks and Gitlab 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 Gitlab Inc are associated (or correlated) with Freshworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshworks has no effect on the direction of Gitlab i.e., Gitlab and Freshworks go up and down completely randomly.

Pair Corralation between Gitlab and Freshworks

Given the investment horizon of 90 days Gitlab Inc is expected to under-perform the Freshworks. In addition to that, Gitlab is 1.42 times more volatile than Freshworks. It trades about -0.05 of its total potential returns per unit of risk. Freshworks is currently generating about -0.04 per unit of volatility. If you would invest  1,600  in Freshworks on December 30, 2024 and sell it today you would lose (147.00) from holding Freshworks or give up 9.19% of portfolio value over 90 days.

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

Gitlab Inc  vs.  Freshworks

Gitlab Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Freshworks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freshworks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Gitlab and Freshworks

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

The idea behind Gitlab Inc and Freshworks 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.