Correlation Between Care Property and QRF SCA

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

By analyzing existing cross correlation between Care Property Invest and QRF SCA, you can compare the effects of market volatilities on Care Property and QRF SCA 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 Care Property with a short position of QRF SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Care Property and QRF SCA.

Diversification Opportunities for Care Property and QRF SCA

0.7

Correlation Coefficient

Care Property  QRF SCA

Poor diversification

The 3 months correlation between Care and QRF is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and QRF SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRF SCA and Care Property 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 Care Property Invest are associated (or correlated) with QRF SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRF SCA has no effect on the direction of Care Property i.e., Care Property and QRF SCA go up and down completely randomly.

Pair Corralation between Care Property and QRF SCA

Assuming the 90 days trading horizon Care Property Invest is expected to under-perform the QRF SCA. But the stock apears to be less risky and, when comparing its historical volatility, Care Property Invest is 1.49 times less risky than QRF SCA. The stock trades about -0.23 of its potential returns per unit of risk. The QRF SCA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,085  in QRF SCA on September 12, 2024 and sell it today you would lose (55.00) from holding QRF SCA or give up 5.07% of portfolio value over 90 days.

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

Care Property Invest  vs.  QRF SCA

Care Property Invest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

QRF SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QRF SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental 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 Care Property and QRF SCA

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

The idea behind Care Property Invest and QRF SCA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.