Correlation Between Quhuo and Freshworks

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

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

Diversification Opportunities for Quhuo and Freshworks

-0.54

Correlation Coefficient

Quhuo  Freshworks

Excellent diversification

The 3 months correlation between Quhuo and Freshworks is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Quhuo and Freshworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshworks 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 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 Quhuo i.e., Quhuo and Freshworks go up and down completely randomly.

Pair Corralation between Quhuo and Freshworks

Allowing for the 90-day total investment horizon Quhuo is expected to under-perform the Freshworks. But the stock apears to be less risky and, when comparing its historical volatility, Quhuo is 1.66 times less risky than Freshworks. The stock trades about -0.02 of its potential returns per unit of risk. The Freshworks is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,169  in Freshworks on October 26, 2024 and sell it today you would earn a total of  635.00  from holding Freshworks or generate 54.32% return on investment over 90 days.

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

Quhuo  vs.  Freshworks

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.

Freshworks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freshworks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Freshworks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quhuo and Freshworks

The main advantage of trading using opposite Quhuo and Freshworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quhuo 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 Quhuo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.