Correlation Between Hub Cyber and Arqit Quantum

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

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

Diversification Opportunities for Hub Cyber and Arqit Quantum

-0.08

Correlation Coefficient

Hub Cyber  Arqit Quantum

Good diversification

The 3 months correlation between Hub and Arqit is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hub Cyber Security and Arqit Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arqit Quantum and Hub Cyber 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 Hub Cyber Security are associated (or correlated) with Arqit Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arqit Quantum has no effect on the direction of Hub Cyber i.e., Hub Cyber and Arqit Quantum go up and down completely randomly.

Pair Corralation between Hub Cyber and Arqit Quantum

Given the investment horizon of 90 days Hub Cyber Security is expected to generate 2.89 times more return on investment than Arqit Quantum. However, Hub Cyber is 2.89 times more volatile than Arqit Quantum. It trades about 0.01 of its potential returns per unit of risk. Arqit Quantum is currently generating about -0.68 per unit of risk. If you would invest  70.00  in Hub Cyber Security on November 28, 2024 and sell it today you would lose (9.00) from holding Hub Cyber Security or give up 12.86% of portfolio value over 90 days.

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

Hub Cyber Security  vs.  Arqit Quantum

Hub Cyber Security

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Cyber Security are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Hub Cyber exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arqit Quantum

Risk-Adjusted Performance

Weak

Over the last 90 days Arqit Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Arqit Quantum may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Hub Cyber and Arqit Quantum

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

The idea behind Hub Cyber Security and Arqit Quantum 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.