Correlation Between Delek Drilling and Quantum BioPharma

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

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

Diversification Opportunities for Delek Drilling and Quantum BioPharma

-0.75

Correlation Coefficient

Delek Drilling  Quantum BioPharma

Pay attention - limited upside

The 3 months correlation between Delek and Quantum is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and Delek Drilling 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 Delek Drilling are associated (or correlated) with Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Delek Drilling i.e., Delek Drilling and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Delek Drilling and Quantum BioPharma

Assuming the 90 days horizon Delek Drilling is expected to generate 0.25 times more return on investment than Quantum BioPharma. However, Delek Drilling is 4.02 times less risky than Quantum BioPharma. It trades about 0.02 of its potential returns per unit of risk. Quantum BioPharma is currently generating about -0.04 per unit of risk. If you would invest  325.00  in Delek Drilling on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Delek Drilling or generate 0.62% return on investment over 90 days.

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

Delek Drilling   vs.  Quantum BioPharma

Delek Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Quantum BioPharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantum BioPharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Quantum BioPharma is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Delek Drilling and Quantum BioPharma

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

The idea behind Delek Drilling and Quantum BioPharma 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.