Correlation Between Arqit Quantum and The9

Can any of the company-specific risk be diversified away by investing in both Arqit Quantum and The9 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 The9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arqit Quantum Warrants and The9 Ltd ADR, you can compare the effects of market volatilities on Arqit Quantum and The9 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 The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arqit Quantum and The9.

Diversification Opportunities for Arqit Quantum and The9

-0.03

Correlation Coefficient

Arqit Quantum  The9

Good diversification

The 3 months correlation between Arqit and The9 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Arqit Quantum Warrants and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR 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 Warrants are associated (or correlated) with The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Arqit Quantum i.e., Arqit Quantum and The9 go up and down completely randomly.

Pair Corralation between Arqit Quantum and The9

Assuming the 90 days horizon Arqit Quantum Warrants is expected to generate 14.13 times more return on investment than The9. However, Arqit Quantum is 14.13 times more volatile than The9 Ltd ADR. It trades about 0.22 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about -0.24 per unit of risk. If you would invest  37.00  in Arqit Quantum Warrants on December 3, 2024 and sell it today you would earn a total of  141.00  from holding Arqit Quantum Warrants or generate 381.08% return on investment over 90 days.

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

Arqit Quantum Warrants  vs.  The9 Ltd ADR

Arqit Quantum Warrants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arqit Quantum Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Arqit Quantum showed solid returns over the last few months and may actually be approaching a breakup point.

The9 Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days The9 Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Arqit Quantum and The9

The main advantage of trading using opposite Arqit Quantum and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arqit Quantum position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.

The idea behind Arqit Quantum Warrants and The9 Ltd ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.