Correlation Between Quhuo and Applovin Corp

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

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

Diversification Opportunities for Quhuo and Applovin Corp

-0.31

Correlation Coefficient

Quhuo  Applovin Corp

Very good diversification

The 3 months correlation between Quhuo and Applovin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Quhuo and Applovin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applovin Corp and Quhuo 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 Quhuo are associated (or correlated) with Applovin Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applovin Corp has no effect on the direction of Quhuo i.e., Quhuo and Applovin Corp go up and down completely randomly.

Pair Corralation between Quhuo and Applovin Corp

Allowing for the 90-day total investment horizon Quhuo is expected to generate 1.1 times less return on investment than Applovin Corp. In addition to that, Quhuo is 4.11 times more volatile than Applovin Corp. It trades about 0.04 of its total potential returns per unit of risk. Applovin Corp is currently generating about 0.19 per unit of volatility. If you would invest  3,736  in Applovin Corp on October 3, 2024 and sell it today you would earn a total of  28,647  from holding Applovin Corp or generate 766.78% return on investment over 90 days.

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

Quhuo  vs.  Applovin Corp

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Applovin Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applovin Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Applovin Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quhuo and Applovin Corp

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

The idea behind Quhuo and Applovin Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.