Correlation Between QRF SCA and Retail Estates

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

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

Diversification Opportunities for QRF SCA and Retail Estates

0.68

Correlation Coefficient

QRF SCA  Retail Estates

Poor diversification

The 3 months correlation between QRF and Retail is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding QRF SCA and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates and QRF SCA 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 QRF SCA are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of QRF SCA i.e., QRF SCA and Retail Estates go up and down completely randomly.

Pair Corralation between QRF SCA and Retail Estates

Assuming the 90 days trading horizon QRF SCA is expected to generate 1.4 times more return on investment than Retail Estates. However, QRF SCA is 1.4 times more volatile than Retail Estates . It trades about -0.01 of its potential returns per unit of risk. Retail Estates is currently generating about -0.13 per unit of risk. If you would invest  1,050  in QRF SCA on September 1, 2024 and sell it today you would lose (15.00) from holding QRF SCA or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

QRF SCA  vs.  Retail Estates

QRF SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QRF SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, QRF SCA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Retail Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with QRF SCA and Retail Estates

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

The idea behind QRF SCA and Retail Estates 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.