Correlation Between CiT and Arqit Quantum

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

By analyzing existing cross correlation between CiT Inc and Arqit Quantum, you can compare the effects of market volatilities on CiT and Arqit Quantum 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 CiT with a short position of Arqit Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CiT and Arqit Quantum.

Diversification Opportunities for CiT and Arqit Quantum

-0.68

Correlation Coefficient

CiT  Arqit Quantum

Excellent diversification

The 3 months correlation between CiT and Arqit is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and Arqit Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arqit Quantum and CiT 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 CiT Inc are associated (or correlated) with Arqit Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arqit Quantum has no effect on the direction of CiT i.e., CiT and Arqit Quantum go up and down completely randomly.

Pair Corralation between CiT and Arqit Quantum

Given the investment horizon of 90 days CiT is expected to generate 1.64 times less return on investment than Arqit Quantum. But when comparing it to its historical volatility, CiT Inc is 2.48 times less risky than Arqit Quantum. It trades about 0.04 of its potential returns per unit of risk. Arqit Quantum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,550  in Arqit Quantum on December 1, 2024 and sell it today you would lose (1,279) from holding Arqit Quantum or give up 50.16% of portfolio value over 90 days.

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

CiT Inc  vs.  Arqit Quantum

CiT Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CiT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arqit Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arqit Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CiT and Arqit Quantum

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

The idea behind CiT Inc and Arqit Quantum 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.