Correlation Between Budimex SA and Quantum Software

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

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

Diversification Opportunities for Budimex SA and Quantum Software

-0.14

Correlation Coefficient

Budimex SA  Quantum Software

Good diversification

The 3 months correlation between Budimex and Quantum is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Budimex SA and Quantum Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Software and Budimex SA 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 Budimex SA are associated (or correlated) with Quantum Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Software has no effect on the direction of Budimex SA i.e., Budimex SA and Quantum Software go up and down completely randomly.

Pair Corralation between Budimex SA and Quantum Software

Assuming the 90 days trading horizon Budimex SA is expected to generate 0.76 times more return on investment than Quantum Software. However, Budimex SA is 1.31 times less risky than Quantum Software. It trades about 0.19 of its potential returns per unit of risk. Quantum Software SA is currently generating about 0.06 per unit of risk. If you would invest  47,340  in Budimex SA on December 23, 2024 and sell it today you would earn a total of  13,810  from holding Budimex SA or generate 29.17% return on investment over 90 days.

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

Budimex SA  vs.  Quantum Software SA

Budimex SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Budimex SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Budimex SA reported solid returns over the last few months and may actually be approaching a breakup point.

Quantum Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Software SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Quantum Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Budimex SA and Quantum Software

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

The idea behind Budimex SA and Quantum Software 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.