Correlation Between BTQ Technologies and Legacy Education

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

By analyzing existing cross correlation between BTQ Technologies Corp and Legacy Education, you can compare the effects of market volatilities on BTQ Technologies and Legacy Education 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 BTQ Technologies with a short position of Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTQ Technologies and Legacy Education.

Diversification Opportunities for BTQ Technologies and Legacy Education

0.6

Correlation Coefficient

BTQ Technologies  Legacy Education

Poor diversification

The 3 months correlation between BTQ and Legacy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BTQ Technologies Corp and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education and BTQ Technologies 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 BTQ Technologies Corp are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of BTQ Technologies i.e., BTQ Technologies and Legacy Education go up and down completely randomly.

Pair Corralation between BTQ Technologies and Legacy Education

Assuming the 90 days horizon BTQ Technologies Corp is expected to generate 2.47 times more return on investment than Legacy Education. However, BTQ Technologies is 2.47 times more volatile than Legacy Education. It trades about 0.1 of its potential returns per unit of risk. Legacy Education is currently generating about 0.24 per unit of risk. If you would invest  29.00  in BTQ Technologies Corp on October 3, 2024 and sell it today you would earn a total of  309.00  from holding BTQ Technologies Corp or generate 1065.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	16.58%
Values	Daily Returns

BTQ Technologies Corp  vs.  Legacy Education

BTQ Technologies Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTQ Technologies Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, BTQ Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Legacy Education

Risk-Adjusted Performance

15 of 100

Solid

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

Pair Trading with BTQ Technologies and Legacy Education

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

The idea behind BTQ Technologies Corp and Legacy Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.