Correlation Between Quarterhill and Real Matters

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

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

Diversification Opportunities for Quarterhill and Real Matters

0.49

Correlation Coefficient

Quarterhill  Real Matters

Very weak diversification

The 3 months correlation between Quarterhill and Real is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Quarterhill and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters and Quarterhill 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 Quarterhill are associated (or correlated) with Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Quarterhill i.e., Quarterhill and Real Matters go up and down completely randomly.

Pair Corralation between Quarterhill and Real Matters

Assuming the 90 days trading horizon Quarterhill is expected to generate 1.35 times more return on investment than Real Matters. However, Quarterhill is 1.35 times more volatile than Real Matters. It trades about 0.04 of its potential returns per unit of risk. Real Matters is currently generating about -0.06 per unit of risk. If you would invest  157.00  in Quarterhill on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Quarterhill or generate 5.1% return on investment over 90 days.

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

Quarterhill  vs.  Real Matters

Quarterhill

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quarterhill are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Quarterhill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Real Matters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Matters 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 Quarterhill and Real Matters

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

The idea behind Quarterhill and Real Matters 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.