Correlation Between Schneider Electric and Quality Industrial

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

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

Diversification Opportunities for Schneider Electric and Quality Industrial

-0.39

Correlation Coefficient

Schneider Electric  Quality Industrial

Very good diversification

The 3 months correlation between Schneider and Quality is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Quality Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Industrial Corp and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Quality Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Industrial Corp has no effect on the direction of Schneider Electric i.e., Schneider Electric and Quality Industrial go up and down completely randomly.

Pair Corralation between Schneider Electric and Quality Industrial

Assuming the 90 days horizon Schneider Electric is expected to generate 18.66 times less return on investment than Quality Industrial. But when comparing it to its historical volatility, Schneider Electric SE is 6.4 times less risky than Quality Industrial. It trades about 0.03 of its potential returns per unit of risk. Quality Industrial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.30  in Quality Industrial Corp on September 2, 2024 and sell it today you would earn a total of  1.20  from holding Quality Industrial Corp or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Schneider Electric SE  vs.  Quality Industrial Corp

Schneider Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schneider Electric is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Quality Industrial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Industrial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Quality Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schneider Electric and Quality Industrial

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

The idea behind Schneider Electric SE and Quality Industrial Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.