Correlation Between Qualys and Dennys Corp

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

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

Diversification Opportunities for Qualys and Dennys Corp

0.22

Correlation Coefficient

Qualys  Dennys Corp

Modest diversification

The 3 months correlation between Qualys and Dennys is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Qualys Inc and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Qualys 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 Qualys Inc are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Qualys i.e., Qualys and Dennys Corp go up and down completely randomly.

Pair Corralation between Qualys and Dennys Corp

Given the investment horizon of 90 days Qualys Inc is expected to generate 0.89 times more return on investment than Dennys Corp. However, Qualys Inc is 1.12 times less risky than Dennys Corp. It trades about 0.08 of its potential returns per unit of risk. Dennys Corp is currently generating about 0.0 per unit of risk. If you would invest  12,646  in Qualys Inc on September 15, 2024 and sell it today you would earn a total of  2,108  from holding Qualys Inc or generate 16.67% return on investment over 90 days.

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

Qualys Inc  vs.  Dennys Corp

Qualys Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Qualys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dennys Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qualys and Dennys Corp

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

The idea behind Qualys Inc and Dennys Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.