Correlation Between Dook Media and Quectel Wireless

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

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

Diversification Opportunities for Dook Media and Quectel Wireless

0.47

Correlation Coefficient

Dook Media  Quectel Wireless

Very weak diversification

The 3 months correlation between Dook and Quectel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dook Media Group and Quectel Wireless Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quectel Wireless Sol and Dook Media 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 Dook Media Group are associated (or correlated) with Quectel Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quectel Wireless Sol has no effect on the direction of Dook Media i.e., Dook Media and Quectel Wireless go up and down completely randomly.

Pair Corralation between Dook Media and Quectel Wireless

Assuming the 90 days trading horizon Dook Media is expected to generate 12.97 times less return on investment than Quectel Wireless. In addition to that, Dook Media is 1.0 times more volatile than Quectel Wireless Solutions. It trades about 0.01 of its total potential returns per unit of risk. Quectel Wireless Solutions is currently generating about 0.12 per unit of volatility. If you would invest  4,522  in Quectel Wireless Solutions on September 29, 2024 and sell it today you would earn a total of  2,605  from holding Quectel Wireless Solutions or generate 57.61% return on investment over 90 days.

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

Dook Media Group  vs.  Quectel Wireless Solutions

Dook Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dook Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dook Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Quectel Wireless Sol

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Dook Media and Quectel Wireless

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

The idea behind Dook Media Group and Quectel Wireless Solutions 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.