Correlation Between Methanor and Quadient

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

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

Diversification Opportunities for Methanor and Quadient

-0.35

Correlation Coefficient

Methanor  Quadient

Very good diversification

The 3 months correlation between Methanor and Quadient is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Methanor and Quadient SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadient SA and Methanor 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 Methanor are associated (or correlated) with Quadient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadient SA has no effect on the direction of Methanor i.e., Methanor and Quadient go up and down completely randomly.

Pair Corralation between Methanor and Quadient

Assuming the 90 days trading horizon Methanor is expected to generate 84.73 times less return on investment than Quadient. In addition to that, Methanor is 1.26 times more volatile than Quadient SA. It trades about 0.0 of its total potential returns per unit of risk. Quadient SA is currently generating about 0.32 per unit of volatility. If you would invest  1,612  in Quadient SA on September 17, 2024 and sell it today you would earn a total of  244.00  from holding Quadient SA or generate 15.14% return on investment over 90 days.

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

Methanor  vs.  Quadient SA

Methanor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methanor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Quadient SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quadient SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Quadient may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Methanor and Quadient

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

The idea behind Methanor and Quadient SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.