Correlation Between CapMan Oyj and QPR Software

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

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

Diversification Opportunities for CapMan Oyj and QPR Software

0.47

Correlation Coefficient

CapMan Oyj  QPR Software

Very weak diversification

The 3 months correlation between CapMan and QPR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and QPR Software Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QPR Software Oyj and CapMan Oyj 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 CapMan Oyj B are associated (or correlated) with QPR Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QPR Software Oyj has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and QPR Software go up and down completely randomly.

Pair Corralation between CapMan Oyj and QPR Software

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 10.21 times less return on investment than QPR Software. But when comparing it to its historical volatility, CapMan Oyj B is 1.74 times less risky than QPR Software. It trades about 0.01 of its potential returns per unit of risk. QPR Software Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  56.00  in QPR Software Oyj on September 5, 2024 and sell it today you would earn a total of  3.00  from holding QPR Software Oyj or generate 5.36% return on investment over 90 days.

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

CapMan Oyj B  vs.  QPR Software Oyj

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapMan Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

QPR Software Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QPR Software Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, QPR Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CapMan Oyj and QPR Software

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

The idea behind CapMan Oyj B and QPR Software Oyj 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.