Correlation Between Freshworks and Model N

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

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

Diversification Opportunities for Freshworks and Model N

0.43

Correlation Coefficient

Freshworks  Model N

Very weak diversification

The 3 months correlation between Freshworks and Model is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Freshworks and Model N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Model N and Freshworks 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 Freshworks are associated (or correlated) with Model N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Model N has no effect on the direction of Freshworks i.e., Freshworks and Model N go up and down completely randomly.

Pair Corralation between Freshworks and Model N

If you would invest  1,112  in Freshworks on September 14, 2024 and sell it today you would earn a total of  577.00  from holding Freshworks or generate 51.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Freshworks  vs.  Model N

Freshworks

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freshworks are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Freshworks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Model N

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Model N has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Model N is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Freshworks and Model N

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

The idea behind Freshworks and Model N 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.