Correlation Between Nippon Telegraph and Quebecor

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

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

Diversification Opportunities for Nippon Telegraph and Quebecor

-0.54

Correlation Coefficient

Nippon Telegraph  Quebecor

Excellent diversification

The 3 months correlation between Nippon and Quebecor is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph and and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor and Nippon Telegraph 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 Nippon Telegraph and are associated (or correlated) with Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Nippon Telegraph i.e., Nippon Telegraph and Quebecor go up and down completely randomly.

Pair Corralation between Nippon Telegraph and Quebecor

Assuming the 90 days horizon Nippon Telegraph is expected to generate 16.26 times less return on investment than Quebecor. In addition to that, Nippon Telegraph is 1.17 times more volatile than Quebecor. It trades about 0.01 of its total potential returns per unit of risk. Quebecor is currently generating about 0.13 per unit of volatility. If you would invest  2,108  in Quebecor on September 17, 2024 and sell it today you would earn a total of  72.00  from holding Quebecor or generate 3.42% return on investment over 90 days.

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

Nippon Telegraph and  vs.  Quebecor

Nippon Telegraph

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Telegraph and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nippon Telegraph is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Quebecor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quebecor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Quebecor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nippon Telegraph and Quebecor

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

The idea behind Nippon Telegraph and and Quebecor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.