Correlation Between Qs International and Snow Capital

Can any of the company-specific risk be diversified away by investing in both Qs International and Snow Capital 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 Qs International and Snow Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qs International Equity and Snow Capital Opportunity, you can compare the effects of market volatilities on Qs International and Snow Capital 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 Qs International with a short position of Snow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs International and Snow Capital.

Diversification Opportunities for Qs International and Snow Capital

0.34

Correlation Coefficient

Qs International  Snow Capital

Weak diversification

The 3 months correlation between LGFEX and Snow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Qs International Equity and Snow Capital Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Opportunity and Qs International 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 Qs International Equity are associated (or correlated) with Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Opportunity has no effect on the direction of Qs International i.e., Qs International and Snow Capital go up and down completely randomly.

Pair Corralation between Qs International and Snow Capital

Assuming the 90 days horizon Qs International Equity is expected to generate 1.25 times more return on investment than Snow Capital. However, Qs International is 1.25 times more volatile than Snow Capital Opportunity. It trades about 0.23 of its potential returns per unit of risk. Snow Capital Opportunity is currently generating about 0.13 per unit of risk. If you would invest  1,727  in Qs International Equity on December 21, 2024 and sell it today you would earn a total of  210.00  from holding Qs International Equity or generate 12.16% return on investment over 90 days.

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

Qs International Equity  vs.  Snow Capital Opportunity

Qs International Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qs International Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Qs International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Snow Capital Opportunity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snow Capital Opportunity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Snow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qs International and Snow Capital

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

The idea behind Qs International Equity and Snow Capital Opportunity 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 Transaction History module to view history of all your transactions and understand their impact on performance.