Correlation Between Carpenter Technology and Quisitive Technology

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

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

Diversification Opportunities for Carpenter Technology and Quisitive Technology

0.46

Correlation Coefficient

Carpenter Technology  Quisitive Technology

Very weak diversification

The 3 months correlation between Carpenter and Quisitive is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Quisitive Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quisitive Technology and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with Quisitive Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quisitive Technology has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Quisitive Technology go up and down completely randomly.

Pair Corralation between Carpenter Technology and Quisitive Technology

Considering the 90-day investment horizon Carpenter Technology is expected to generate 4.52 times less return on investment than Quisitive Technology. But when comparing it to its historical volatility, Carpenter Technology is 2.34 times less risky than Quisitive Technology. It trades about 0.06 of its potential returns per unit of risk. Quisitive Technology Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Quisitive Technology Solutions on December 3, 2024 and sell it today you would earn a total of  11.00  from holding Quisitive Technology Solutions or generate 40.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Carpenter Technology  vs.  Quisitive Technology Solutions

Carpenter Technology

Risk-Adjusted Performance

Insignificant

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

Quisitive Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quisitive Technology Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Quisitive Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carpenter Technology and Quisitive Technology

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

The idea behind Carpenter Technology and Quisitive Technology Solutions 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.