Correlation Between Freshworks and EPlus

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

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

Diversification Opportunities for Freshworks and EPlus

-0.79

Correlation Coefficient

Freshworks  EPlus

Pay attention - limited upside

The 3 months correlation between Freshworks and EPlus is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Freshworks and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc 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 EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Freshworks i.e., Freshworks and EPlus go up and down completely randomly.

Pair Corralation between Freshworks and EPlus

Given the investment horizon of 90 days Freshworks is expected to generate 1.24 times more return on investment than EPlus. However, Freshworks is 1.24 times more volatile than ePlus inc. It trades about 0.09 of its potential returns per unit of risk. ePlus inc is currently generating about 0.02 per unit of risk. If you would invest  1,232  in Freshworks on September 15, 2024 and sell it today you would earn a total of  423.00  from holding Freshworks or generate 34.33% return on investment over 90 days.

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

Freshworks  vs.  ePlus inc

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.

ePlus inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Freshworks and EPlus

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

The idea behind Freshworks and ePlus inc 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.