Correlation Between Quhuo and Aspen Technology

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

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

Diversification Opportunities for Quhuo and Aspen Technology

-0.29

Correlation Coefficient

Quhuo  Aspen Technology

Very good diversification

The 3 months correlation between Quhuo and Aspen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Quhuo and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology 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 Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Quhuo i.e., Quhuo and Aspen Technology go up and down completely randomly.

Pair Corralation between Quhuo and Aspen Technology

Allowing for the 90-day total investment horizon Quhuo is expected to generate 13.45 times more return on investment than Aspen Technology. However, Quhuo is 13.45 times more volatile than Aspen Technology. It trades about 0.09 of its potential returns per unit of risk. Aspen Technology is currently generating about 0.1 per unit of risk. If you would invest  40.00  in Quhuo on September 29, 2024 and sell it today you would earn a total of  112.00  from holding Quhuo or generate 280.0% return on investment over 90 days.

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

Quhuo  vs.  Aspen Technology

Quhuo

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quhuo are ranked lower than 8 (%) 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.

Aspen Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Aspen Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Quhuo and Aspen Technology

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

The idea behind Quhuo and Aspen Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.