Correlation Between GOODYEAR T and QIIWI GAMES

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

By analyzing existing cross correlation between GOODYEAR T RUBBER and QIIWI GAMES AB, you can compare the effects of market volatilities on GOODYEAR T and QIIWI GAMES 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 GOODYEAR T with a short position of QIIWI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and QIIWI GAMES.

Diversification Opportunities for GOODYEAR T and QIIWI GAMES

0.61

Correlation Coefficient

GOODYEAR T  QIIWI GAMES

Poor diversification

The 3 months correlation between GOODYEAR and QIIWI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and QIIWI GAMES AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QIIWI GAMES AB and GOODYEAR T 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 GOODYEAR T RUBBER are associated (or correlated) with QIIWI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QIIWI GAMES AB has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and QIIWI GAMES go up and down completely randomly.

Pair Corralation between GOODYEAR T and QIIWI GAMES

Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the QIIWI GAMES. But the stock apears to be less risky and, when comparing its historical volatility, GOODYEAR T RUBBER is 1.66 times less risky than QIIWI GAMES. The stock trades about -0.03 of its potential returns per unit of risk. The QIIWI GAMES AB is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  20.00  in QIIWI GAMES AB on September 21, 2024 and sell it today you would earn a total of  10.00  from holding QIIWI GAMES AB or generate 50.0% return on investment over 90 days.

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

GOODYEAR T RUBBER  vs.  QIIWI GAMES AB

GOODYEAR T RUBBER

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GOODYEAR T unveiled solid returns over the last few months and may actually be approaching a breakup point.

QIIWI GAMES AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QIIWI GAMES AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QIIWI GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOODYEAR T and QIIWI GAMES

The main advantage of trading using opposite GOODYEAR T and QIIWI GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, QIIWI GAMES 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 QIIWI GAMES will offset losses from the drop in QIIWI GAMES's long position.

The idea behind GOODYEAR T RUBBER and QIIWI GAMES AB 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.