Correlation Between Daily Journal and QuhuoLtd

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Can any of the company-specific risk be diversified away by investing in both Daily Journal and QuhuoLtd 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 Daily Journal and QuhuoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daily Journal Corp and QuhuoLtd, you can compare the effects of market volatilities on Daily Journal and QuhuoLtd 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 Daily Journal with a short position of QuhuoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daily Journal and QuhuoLtd.

Diversification Opportunities for Daily Journal and QuhuoLtd

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Daily and QuhuoLtd is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and QuhuoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuhuoLtd and Daily Journal 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 Daily Journal Corp are associated (or correlated) with QuhuoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuhuoLtd has no effect on the direction of Daily Journal i.e., Daily Journal and QuhuoLtd go up and down completely randomly.

Pair Corralation between Daily Journal and QuhuoLtd

Given the investment horizon of 90 days Daily Journal Corp is expected to generate 0.32 times more return on investment than QuhuoLtd. However, Daily Journal Corp is 3.15 times less risky than QuhuoLtd. It trades about 0.09 of its potential returns per unit of risk. QuhuoLtd is currently generating about 0.02 per unit of risk. If you would invest  29,200  in Daily Journal Corp on December 3, 2023 and sell it today you would earn a total of  5,810  from holding Daily Journal Corp or generate 19.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Daily Journal Corp  vs.  QuhuoLtd

 Performance 
       Timeline  
Daily Journal Corp 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Daily Journal may actually be approaching a critical reversion point that can send shares even higher in April 2024.
QuhuoLtd 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days QuhuoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Daily Journal and QuhuoLtd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Daily Journal and QuhuoLtd

The main advantage of trading using opposite Daily Journal and QuhuoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daily Journal position performs unexpectedly, QuhuoLtd 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 QuhuoLtd will offset losses from the drop in QuhuoLtd's long position.
The idea behind Daily Journal Corp and QuhuoLtd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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