Correlation Between Quantumscape Corp and Hyzon Motors

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

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

Diversification Opportunities for Quantumscape Corp and Hyzon Motors

0.74

Correlation Coefficient

Quantumscape Corp  Hyzon Motors

Poor diversification

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

Pair Corralation between Quantumscape Corp and Hyzon Motors

Allowing for the 90-day total investment horizon Quantumscape Corp is expected to under-perform the Hyzon Motors. But the stock apears to be less risky and, when comparing its historical volatility, Quantumscape Corp is 1.66 times less risky than Hyzon Motors. The stock trades about -0.05 of its potential returns per unit of risk. The Hyzon Motors is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  235.00  in Hyzon Motors on September 14, 2024 and sell it today you would lose (46.00) from holding Hyzon Motors or give up 19.57% of portfolio value over 90 days.

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

Quantumscape Corp  vs.  Hyzon Motors

Quantumscape Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantumscape Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Quantumscape Corp and Hyzon Motors

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

The idea behind Quantumscape Corp and Hyzon Motors 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.