Correlation Between Quhuo and Fangdd Network

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

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

Diversification Opportunities for Quhuo and Fangdd Network

0.37

Correlation Coefficient

Quhuo  Fangdd Network

Weak diversification

The 3 months correlation between Quhuo and Fangdd is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Quhuo and Fangdd Network Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fangdd Network Group 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 Fangdd Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fangdd Network Group has no effect on the direction of Quhuo i.e., Quhuo and Fangdd Network go up and down completely randomly.

Pair Corralation between Quhuo and Fangdd Network

Allowing for the 90-day total investment horizon Quhuo is expected to generate 5.74 times less return on investment than Fangdd Network. But when comparing it to its historical volatility, Quhuo is 3.7 times less risky than Fangdd Network. It trades about 0.02 of its potential returns per unit of risk. Fangdd Network Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Fangdd Network Group on November 28, 2024 and sell it today you would lose (1.00) from holding Fangdd Network Group or give up 1.72% of portfolio value over 90 days.

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

Quhuo  vs.  Fangdd Network Group

Quhuo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quhuo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Fangdd Network Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fangdd Network Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Fangdd Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quhuo and Fangdd Network

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

The idea behind Quhuo and Fangdd Network Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.