Correlation Between MicroStrategy Incorporated and Quantgate Systems

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

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

Diversification Opportunities for MicroStrategy Incorporated and Quantgate Systems

0.74

Correlation Coefficient

MicroStrategy Incorporated  Quantgate Systems

Poor diversification

The 3 months correlation between MicroStrategy and Quantgate is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Quantgate Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantgate Systems and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Quantgate Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantgate Systems has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Quantgate Systems go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Quantgate Systems

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 2.24 times less return on investment than Quantgate Systems. But when comparing it to its historical volatility, MicroStrategy Incorporated is 3.21 times less risky than Quantgate Systems. It trades about 0.29 of its potential returns per unit of risk. Quantgate Systems is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.76  in Quantgate Systems on September 17, 2024 and sell it today you would earn a total of  2.24  from holding Quantgate Systems or generate 294.74% return on investment over 90 days.

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

MicroStrategy Incorporated  vs.  Quantgate Systems

MicroStrategy Incorporated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Quantgate Systems

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantgate Systems are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Quantgate Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroStrategy Incorporated and Quantgate Systems

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

The idea behind MicroStrategy Incorporated and Quantgate Systems 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.