Correlation Between Carnegie Clean and Qbe Insurance

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

By analyzing existing cross correlation between Carnegie Clean Energy and Qbe Insurance Group, you can compare the effects of market volatilities on Carnegie Clean and Qbe Insurance 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 Carnegie Clean with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Qbe Insurance.

Diversification Opportunities for Carnegie Clean and Qbe Insurance

0.42

Correlation Coefficient

Carnegie Clean  Qbe Insurance

Very weak diversification

The 3 months correlation between Carnegie and Qbe is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Qbe Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qbe Insurance Group and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Qbe Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qbe Insurance Group has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Qbe Insurance go up and down completely randomly.

Pair Corralation between Carnegie Clean and Qbe Insurance

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Qbe Insurance. In addition to that, Carnegie Clean is 2.61 times more volatile than Qbe Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. Qbe Insurance Group is currently generating about -0.01 per unit of volatility. If you would invest  1,899  in Qbe Insurance Group on September 15, 2024 and sell it today you would lose (9.00) from holding Qbe Insurance Group or give up 0.47% of portfolio value over 90 days.

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

Carnegie Clean Energy  vs.  Qbe Insurance Group

Carnegie Clean Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Carnegie Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Qbe Insurance Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Qbe Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Qbe Insurance

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

The idea behind Carnegie Clean Energy and Qbe Insurance Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.