Correlation Between QTC Energy and Qualitech Public

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

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

Diversification Opportunities for QTC Energy and Qualitech Public

0.77

Correlation Coefficient

QTC Energy  Qualitech Public

Poor diversification

The 3 months correlation between QTC and Qualitech is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding QTC Energy Public and Qualitech Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualitech Public and QTC Energy 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 QTC Energy Public are associated (or correlated) with Qualitech Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualitech Public has no effect on the direction of QTC Energy i.e., QTC Energy and Qualitech Public go up and down completely randomly.

Pair Corralation between QTC Energy and Qualitech Public

Assuming the 90 days trading horizon QTC Energy Public is expected to generate 0.52 times more return on investment than Qualitech Public. However, QTC Energy Public is 1.92 times less risky than Qualitech Public. It trades about -0.05 of its potential returns per unit of risk. Qualitech Public is currently generating about -0.13 per unit of risk. If you would invest  400.00  in QTC Energy Public on September 12, 2024 and sell it today you would lose (16.00) from holding QTC Energy Public or give up 4.0% of portfolio value over 90 days.

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

QTC Energy Public  vs.  Qualitech Public

QTC Energy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QTC Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, QTC Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Qualitech Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qualitech Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with QTC Energy and Qualitech Public

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

The idea behind QTC Energy Public and Qualitech Public 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.