Correlation Between GI Group and Quantum Software

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

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

Diversification Opportunities for GI Group and Quantum Software

0.25

Correlation Coefficient

GI Group  Quantum Software

Modest diversification

The 3 months correlation between GIG and Quantum is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GI Group Poland and Quantum Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Software and GI Group 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 GI Group Poland are associated (or correlated) with Quantum Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Software has no effect on the direction of GI Group i.e., GI Group and Quantum Software go up and down completely randomly.

Pair Corralation between GI Group and Quantum Software

Assuming the 90 days trading horizon GI Group Poland is expected to under-perform the Quantum Software. But the stock apears to be less risky and, when comparing its historical volatility, GI Group Poland is 3.17 times less risky than Quantum Software. The stock trades about -0.09 of its potential returns per unit of risk. The Quantum Software SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Quantum Software SA on September 4, 2024 and sell it today you would earn a total of  260.00  from holding Quantum Software SA or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

GI Group Poland  vs.  Quantum Software SA

GI Group Poland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GI Group Poland has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Quantum Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Software SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Quantum Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GI Group and Quantum Software

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

The idea behind GI Group Poland and Quantum Software SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.