Correlation Between Workiva and QuhuoLtd

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

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

Diversification Opportunities for Workiva and QuhuoLtd

0.72

Correlation Coefficient

Workiva  QuhuoLtd

Poor diversification

The 3 months correlation between Workiva and QuhuoLtd is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and QuhuoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuhuoLtd and Workiva 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 Workiva 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 Workiva i.e., Workiva and QuhuoLtd go up and down completely randomly.

Pair Corralation between Workiva and QuhuoLtd

Allowing for the 90-day total investment horizon Workiva is expected to under-perform the QuhuoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Workiva is 2.39 times less risky than QuhuoLtd. The stock trades about -0.06 of its potential returns per unit of risk. The QuhuoLtd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  60.00  in QuhuoLtd on January 26, 2024 and sell it today you would lose (1.00) from holding QuhuoLtd or give up 1.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Workiva  vs.  QuhuoLtd

Workiva

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

QuhuoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QuhuoLtd 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 May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Workiva and QuhuoLtd

The main advantage of trading using opposite Workiva and QuhuoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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 Workiva 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.