Correlation Between MQ Technology and Diversified Gateway

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

By analyzing existing cross correlation between MQ Technology Bhd and Diversified Gateway Solutions, you can compare the effects of market volatilities on MQ Technology and Diversified Gateway 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 MQ Technology with a short position of Diversified Gateway. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQ Technology and Diversified Gateway.

Diversification Opportunities for MQ Technology and Diversified Gateway

-0.06

Correlation Coefficient

MQ Technology  Diversified Gateway

Good diversification

The 3 months correlation between 0070 and Diversified is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MQ Technology Bhd and Diversified Gateway Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Gateway and MQ Technology 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 MQ Technology Bhd are associated (or correlated) with Diversified Gateway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Gateway has no effect on the direction of MQ Technology i.e., MQ Technology and Diversified Gateway go up and down completely randomly.

Pair Corralation between MQ Technology and Diversified Gateway

Assuming the 90 days trading horizon MQ Technology Bhd is expected to generate 6.69 times more return on investment than Diversified Gateway. However, MQ Technology is 6.69 times more volatile than Diversified Gateway Solutions. It trades about 0.06 of its potential returns per unit of risk. Diversified Gateway Solutions is currently generating about 0.05 per unit of risk. If you would invest  50.00  in MQ Technology Bhd on October 9, 2024 and sell it today you would lose (40.50) from holding MQ Technology Bhd or give up 81.0% of portfolio value over 90 days.

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

MQ Technology Bhd  vs.  Diversified Gateway Solutions

MQ Technology Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MQ Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Diversified Gateway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diversified Gateway Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Diversified Gateway is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MQ Technology and Diversified Gateway

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

The idea behind MQ Technology Bhd and Diversified Gateway Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.