Correlation Between Trimble and Quanergy Systems

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

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

Diversification Opportunities for Trimble and Quanergy Systems

-0.52

Correlation Coefficient

Trimble  Quanergy Systems

Excellent diversification

The 3 months correlation between Trimble and Quanergy is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Quanergy Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanergy Systems and Trimble 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 Trimble are associated (or correlated) with Quanergy Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanergy Systems has no effect on the direction of Trimble i.e., Trimble and Quanergy Systems go up and down completely randomly.

Pair Corralation between Trimble and Quanergy Systems

If you would invest  5,669  in Trimble on August 30, 2024 and sell it today you would earn a total of  1,574  from holding Trimble or generate 27.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Trimble  vs.  Quanergy Systems

Trimble

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal primary indicators, Trimble sustained solid returns over the last few months and may actually be approaching a breakup point.

Quanergy Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quanergy Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Quanergy Systems is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Trimble and Quanergy Systems

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

The idea behind Trimble and Quanergy Systems 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.