Correlation Between Arqit Quantum and Gen Digital

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

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

Diversification Opportunities for Arqit Quantum and Gen Digital

0.64

Correlation Coefficient

Arqit Quantum  Gen Digital

Poor diversification

The 3 months correlation between Arqit and Gen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arqit Quantum and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Arqit Quantum i.e., Arqit Quantum and Gen Digital go up and down completely randomly.

Pair Corralation between Arqit Quantum and Gen Digital

Given the investment horizon of 90 days Arqit Quantum is expected to generate 13.97 times more return on investment than Gen Digital. However, Arqit Quantum is 13.97 times more volatile than Gen Digital. It trades about 0.55 of its potential returns per unit of risk. Gen Digital is currently generating about 0.4 per unit of risk. If you would invest  586.00  in Arqit Quantum on September 5, 2024 and sell it today you would earn a total of  2,110  from holding Arqit Quantum or generate 360.07% 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.  Gen Digital

Arqit Quantum

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arqit Quantum are ranked lower than 16 (%) 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.

Gen Digital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gen Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arqit Quantum and Gen Digital

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

The idea behind Arqit Quantum and Gen Digital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.