Correlation Between First National and Quantum EMotion

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

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

Diversification Opportunities for First National and Quantum EMotion

-0.37

Correlation Coefficient

First National  Quantum EMotion

Very good diversification

The 3 months correlation between First and Quantum is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First National of and Quantum eMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum eMotion and First National 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 First National of are associated (or correlated) with Quantum EMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum eMotion has no effect on the direction of First National i.e., First National and Quantum EMotion go up and down completely randomly.

Pair Corralation between First National and Quantum EMotion

Given the investment horizon of 90 days First National of is expected to under-perform the Quantum EMotion. But the pink sheet apears to be less risky and, when comparing its historical volatility, First National of is 29.35 times less risky than Quantum EMotion. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Quantum eMotion is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Quantum eMotion on October 4, 2024 and sell it today you would earn a total of  110.00  from holding Quantum eMotion or generate 785.71% return on investment over 90 days.

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

First National of  vs.  Quantum eMotion

First National

Risk-Adjusted Performance

0 of 100

Very Weak

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

Quantum eMotion

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum eMotion are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Quantum EMotion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First National and Quantum EMotion

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

The idea behind First National of and Quantum eMotion 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.