Correlation Between Arqit Quantum and Cloudflare

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

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

Diversification Opportunities for Arqit Quantum and Cloudflare

-0.46

Correlation Coefficient

Arqit Quantum  Cloudflare

Very good diversification

The 3 months correlation between Arqit and Cloudflare is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arqit Quantum and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare 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 Cloudflare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudflare has no effect on the direction of Arqit Quantum i.e., Arqit Quantum and Cloudflare go up and down completely randomly.

Pair Corralation between Arqit Quantum and Cloudflare

Given the investment horizon of 90 days Arqit Quantum is expected to under-perform the Cloudflare. In addition to that, Arqit Quantum is 3.66 times more volatile than Cloudflare. It trades about -0.01 of its total potential returns per unit of risk. Cloudflare is currently generating about 0.17 per unit of volatility. If you would invest  10,505  in Cloudflare on December 2, 2024 and sell it today you would earn a total of  4,025  from holding Cloudflare or generate 38.32% return on investment over 90 days.

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

Arqit Quantum  vs.  Cloudflare

Arqit Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arqit Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Cloudflare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arqit Quantum and Cloudflare

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

The idea behind Arqit Quantum and Cloudflare 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 Transaction History module to view history of all your transactions and understand their impact on performance.