Correlation Between Quhuo and Meridianlink

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

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

Diversification Opportunities for Quhuo and Meridianlink

-0.17

Correlation Coefficient

Quhuo  Meridianlink

Good diversification

The 3 months correlation between Quhuo and Meridianlink is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Quhuo and Meridianlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridianlink 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 Meridianlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridianlink has no effect on the direction of Quhuo i.e., Quhuo and Meridianlink go up and down completely randomly.

Pair Corralation between Quhuo and Meridianlink

Allowing for the 90-day total investment horizon Quhuo is expected to generate 6.71 times more return on investment than Meridianlink. However, Quhuo is 6.71 times more volatile than Meridianlink. It trades about 0.04 of its potential returns per unit of risk. Meridianlink is currently generating about 0.03 per unit of risk. If you would invest  143.00  in Quhuo on October 21, 2024 and sell it today you would lose (11.00) from holding Quhuo or give up 7.69% of portfolio value over 90 days.

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

Quhuo  vs.  Meridianlink

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 fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Quhuo and Meridianlink

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

The idea behind Quhuo and Meridianlink 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.