Correlation Between Smith Micro and Quhuo

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

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

Diversification Opportunities for Smith Micro and Quhuo

0.34

Correlation Coefficient

Smith Micro  Quhuo

Weak diversification

The 3 months correlation between Smith and Quhuo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Smith Micro Software and Quhuo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quhuo and Smith Micro 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 Smith Micro Software are associated (or correlated) with Quhuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quhuo has no effect on the direction of Smith Micro i.e., Smith Micro and Quhuo go up and down completely randomly.

Pair Corralation between Smith Micro and Quhuo

Given the investment horizon of 90 days Smith Micro Software is expected to generate 5.08 times more return on investment than Quhuo. However, Smith Micro is 5.08 times more volatile than Quhuo. It trades about 0.19 of its potential returns per unit of risk. Quhuo is currently generating about -0.15 per unit of risk. If you would invest  88.00  in Smith Micro Software on October 16, 2024 and sell it today you would earn a total of  35.00  from holding Smith Micro Software or generate 39.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Smith Micro Software  vs.  Quhuo

Smith Micro Software

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Micro Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Smith Micro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Smith Micro and Quhuo

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

The idea behind Smith Micro Software and Quhuo 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.