Correlation Between Arqit Quantum and Affirm Holdings

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

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

Diversification Opportunities for Arqit Quantum and Affirm Holdings

0.74

Correlation Coefficient

Arqit Quantum  Affirm Holdings

Poor diversification

The 3 months correlation between Arqit and Affirm is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arqit Quantum and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Arqit Quantum 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 Arqit Quantum are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Arqit Quantum i.e., Arqit Quantum and Affirm Holdings go up and down completely randomly.

Pair Corralation between Arqit Quantum and Affirm Holdings

Given the investment horizon of 90 days Arqit Quantum is expected to generate 3.86 times more return on investment than Affirm Holdings. However, Arqit Quantum is 3.86 times more volatile than Affirm Holdings. It trades about 0.2 of its potential returns per unit of risk. Affirm Holdings is currently generating about -0.12 per unit of risk. If you would invest  2,345  in Arqit Quantum on October 10, 2024 and sell it today you would earn a total of  1,225  from holding Arqit Quantum or generate 52.24% return on investment over 90 days.

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

Arqit Quantum  vs.  Affirm Holdings

Arqit Quantum

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arqit Quantum are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Arqit Quantum reported solid returns over the last few months and may actually be approaching a breakup point.

Affirm Holdings

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affirm Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Affirm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arqit Quantum and Affirm Holdings

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

The idea behind Arqit Quantum and Affirm Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.