Correlation Between Quarterhill and Royal Helium

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

By analyzing existing cross correlation between Quarterhill and Royal Helium, you can compare the effects of market volatilities on Quarterhill and Royal Helium 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 Royal Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quarterhill and Royal Helium.

Diversification Opportunities for Quarterhill and Royal Helium

0.29

Correlation Coefficient

Quarterhill  Royal Helium

Modest diversification

The 3 months correlation between Quarterhill and Royal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Quarterhill and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium 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 Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of Quarterhill i.e., Quarterhill and Royal Helium go up and down completely randomly.

Pair Corralation between Quarterhill and Royal Helium

Assuming the 90 days trading horizon Quarterhill is expected to generate 0.38 times more return on investment than Royal Helium. However, Quarterhill is 2.6 times less risky than Royal Helium. It trades about 0.04 of its potential returns per unit of risk. Royal Helium is currently generating about -0.01 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Quarterhill  vs.  Royal Helium

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.

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Royal Helium is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Quarterhill and Royal Helium

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

The idea behind Quarterhill and Royal Helium 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.