Correlation Between SPS Commerce and Full Truck

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

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

Diversification Opportunities for SPS Commerce and Full Truck

0.11

Correlation Coefficient

SPS Commerce  Full Truck

Average diversification

The 3 months correlation between SPS and Full is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and Full Truck Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Full Truck Alliance and SPS Commerce 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 SPS Commerce are associated (or correlated) with Full Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Full Truck Alliance has no effect on the direction of SPS Commerce i.e., SPS Commerce and Full Truck go up and down completely randomly.

Pair Corralation between SPS Commerce and Full Truck

Given the investment horizon of 90 days SPS Commerce is expected to under-perform the Full Truck. But the stock apears to be less risky and, when comparing its historical volatility, SPS Commerce is 1.37 times less risky than Full Truck. The stock trades about 0.0 of its potential returns per unit of risk. The Full Truck Alliance is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,131  in Full Truck Alliance on May 1, 2025 and sell it today you would earn a total of  18.00  from holding Full Truck Alliance or generate 1.59% return on investment over 90 days.

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

SPS Commerce  vs.  Full Truck Alliance

SPS Commerce

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPS Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPS Commerce is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Full Truck Alliance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Full Truck is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPS Commerce and Full Truck

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

The idea behind SPS Commerce and Full Truck Alliance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.