Correlation Between Quebecor and Knight Therapeutics

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

By analyzing existing cross correlation between Quebecor and Knight Therapeutics, you can compare the effects of market volatilities on Quebecor and Knight Therapeutics 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 Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quebecor and Knight Therapeutics.

Diversification Opportunities for Quebecor and Knight Therapeutics

0.74

Correlation Coefficient

Quebecor  Knight Therapeutics

Poor diversification

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

Pair Corralation between Quebecor and Knight Therapeutics

Assuming the 90 days trading horizon Quebecor is expected to generate 0.78 times more return on investment than Knight Therapeutics. However, Quebecor is 1.29 times less risky than Knight Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  3,328  in Quebecor on September 3, 2024 and sell it today you would lose (7.00) from holding Quebecor or give up 0.21% of portfolio value over 90 days.

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

Quebecor  vs.  Knight Therapeutics

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. In spite of comparatively stable basic indicators, Quebecor is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Knight Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knight Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Knight Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Quebecor and Knight Therapeutics

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

The idea behind Quebecor and Knight Therapeutics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.