Correlation Between BRF SA and Qed Connect

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

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

Diversification Opportunities for BRF SA and Qed Connect

-0.41

Correlation Coefficient

BRF SA  Qed Connect

Very good diversification

The 3 months correlation between BRF and Qed is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR and Qed Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qed Connect and BRF 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 BRF SA ADR are associated (or correlated) with Qed Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qed Connect has no effect on the direction of BRF SA i.e., BRF SA and Qed Connect go up and down completely randomly.

Pair Corralation between BRF SA and Qed Connect

Given the investment horizon of 90 days BRF SA ADR is expected to under-perform the Qed Connect. But the stock apears to be less risky and, when comparing its historical volatility, BRF SA ADR is 4.22 times less risky than Qed Connect. The stock trades about -0.01 of its potential returns per unit of risk. The Qed Connect is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Qed Connect on October 1, 2024 and sell it today you would earn a total of  0.00  from holding Qed Connect or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BRF SA ADR  vs.  Qed Connect

BRF SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRF SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BRF SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Qed Connect

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qed Connect are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Qed Connect displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRF SA and Qed Connect

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

The idea behind BRF SA ADR and Qed Connect 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.