Correlation Between KVH Industries and Quantum BioPharma

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

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

Diversification Opportunities for KVH Industries and Quantum BioPharma

-0.54

Correlation Coefficient

KVH Industries  Quantum BioPharma

Excellent diversification

The 3 months correlation between KVH and Quantum is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Quantum BioPharma go up and down completely randomly.

Pair Corralation between KVH Industries and Quantum BioPharma

Given the investment horizon of 90 days KVH Industries is expected to generate 0.27 times more return on investment than Quantum BioPharma. However, KVH Industries is 3.7 times less risky than Quantum BioPharma. It trades about 0.42 of its potential returns per unit of risk. Quantum BioPharma is currently generating about 0.09 per unit of risk. If you would invest  526.00  in KVH Industries on October 23, 2024 and sell it today you would earn a total of  67.00  from holding KVH Industries or generate 12.74% return on investment over 90 days.

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

KVH Industries  vs.  Quantum BioPharma

KVH Industries

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries demonstrated 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 fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KVH Industries and Quantum BioPharma

The main advantage of trading using opposite KVH Industries and Quantum BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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 KVH Industries 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.