Correlation Between QPR Software and Aiforia Technologies

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

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

Diversification Opportunities for QPR Software and Aiforia Technologies

0.46

Correlation Coefficient

QPR Software  Aiforia Technologies

Very weak diversification

The 3 months correlation between QPR and Aiforia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding QPR Software Oyj and Aiforia Technologies Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiforia Technologies Oyj and QPR Software 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 QPR Software Oyj are associated (or correlated) with Aiforia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiforia Technologies Oyj has no effect on the direction of QPR Software i.e., QPR Software and Aiforia Technologies go up and down completely randomly.

Pair Corralation between QPR Software and Aiforia Technologies

Assuming the 90 days trading horizon QPR Software Oyj is expected to generate 1.44 times more return on investment than Aiforia Technologies. However, QPR Software is 1.44 times more volatile than Aiforia Technologies Oyj. It trades about 0.19 of its potential returns per unit of risk. Aiforia Technologies Oyj is currently generating about -0.14 per unit of risk. If you would invest  59.00  in QPR Software Oyj on September 16, 2024 and sell it today you would earn a total of  7.00  from holding QPR Software Oyj or generate 11.86% return on investment over 90 days.

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

QPR Software Oyj  vs.  Aiforia Technologies Oyj

QPR Software Oyj

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QPR Software Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, QPR Software demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aiforia Technologies Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aiforia Technologies Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with QPR Software and Aiforia Technologies

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

The idea behind QPR Software Oyj and Aiforia Technologies Oyj 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.