Correlation Between Canadian General and Quadrise Plc

Can any of the company-specific risk be diversified away by investing in both Canadian General and Quadrise Plc 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 Canadian General and Quadrise Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian General Investments and Quadrise Plc, you can compare the effects of market volatilities on Canadian General and Quadrise Plc 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 Canadian General with a short position of Quadrise Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Quadrise Plc.

Diversification Opportunities for Canadian General and Quadrise Plc

0.4

Correlation Coefficient

Canadian General  Quadrise Plc

Very weak diversification

The 3 months correlation between Canadian and Quadrise is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Quadrise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadrise Plc and Canadian General 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 Canadian General Investments are associated (or correlated) with Quadrise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadrise Plc has no effect on the direction of Canadian General i.e., Canadian General and Quadrise Plc go up and down completely randomly.

Pair Corralation between Canadian General and Quadrise Plc

Assuming the 90 days trading horizon Canadian General is expected to generate 7.97 times less return on investment than Quadrise Plc. But when comparing it to its historical volatility, Canadian General Investments is 5.33 times less risky than Quadrise Plc. It trades about 0.04 of its potential returns per unit of risk. Quadrise Plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  148.00  in Quadrise Plc on October 26, 2024 and sell it today you would earn a total of  265.00  from holding Quadrise Plc or generate 179.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Canadian General Investments  vs.  Quadrise Plc

Canadian General Inv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quadrise Plc

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quadrise Plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Quadrise Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and Quadrise Plc

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

The idea behind Canadian General Investments and Quadrise Plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.