Correlation Between Qt Group and Solteq PLC

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

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

Diversification Opportunities for Qt Group and Solteq PLC

0.16

Correlation Coefficient

Qt Group  Solteq PLC

Average diversification

The 3 months correlation between QTCOM and Solteq is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Qt Group Oyj and Solteq PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solteq PLC and Qt Group 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 Qt Group Oyj are associated (or correlated) with Solteq PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solteq PLC has no effect on the direction of Qt Group i.e., Qt Group and Solteq PLC go up and down completely randomly.

Pair Corralation between Qt Group and Solteq PLC

Assuming the 90 days trading horizon Qt Group Oyj is expected to under-perform the Solteq PLC. But the stock apears to be less risky and, when comparing its historical volatility, Qt Group Oyj is 1.22 times less risky than Solteq PLC. The stock trades about -0.11 of its potential returns per unit of risk. The Solteq PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Solteq PLC on September 12, 2024 and sell it today you would lose (1.00) from holding Solteq PLC or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Qt Group Oyj  vs.  Solteq PLC

Qt Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qt Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Solteq PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solteq PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Solteq PLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qt Group and Solteq PLC

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

The idea behind Qt Group Oyj and Solteq PLC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.