Correlation Between Quebecor and Power Assets

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

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

Diversification Opportunities for Quebecor and Power Assets

-0.5

Correlation Coefficient

Quebecor  Power Assets

Very good diversification

The 3 months correlation between Quebecor and Power is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quebecor and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and Quebecor 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 Quebecor are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Quebecor i.e., Quebecor and Power Assets go up and down completely randomly.

Pair Corralation between Quebecor and Power Assets

Assuming the 90 days horizon Quebecor is expected to under-perform the Power Assets. But the stock apears to be less risky and, when comparing its historical volatility, Quebecor is 1.07 times less risky than Power Assets. The stock trades about -0.02 of its potential returns per unit of risk. The Power Assets Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  615.00  in Power Assets Holdings on September 16, 2024 and sell it today you would earn a total of  10.00  from holding Power Assets Holdings or generate 1.63% return on investment over 90 days.

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

Quebecor  vs.  Power Assets Holdings

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Assets Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Assets Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Power Assets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Quebecor and Power Assets

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

The idea behind Quebecor and Power Assets Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.