Correlation Between Media and Qlife Holding

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

By analyzing existing cross correlation between Media and Games and Qlife Holding AB, you can compare the effects of market volatilities on Media and Qlife Holding 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 Media with a short position of Qlife Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Qlife Holding.

Diversification Opportunities for Media and Qlife Holding

-0.22

Correlation Coefficient

Media  Qlife Holding

Very good diversification

The 3 months correlation between Media and Qlife is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Qlife Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qlife Holding AB and Media 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 Media and Games are associated (or correlated) with Qlife Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qlife Holding AB has no effect on the direction of Media i.e., Media and Qlife Holding go up and down completely randomly.

Pair Corralation between Media and Qlife Holding

Assuming the 90 days trading horizon Media and Games is expected to generate 0.51 times more return on investment than Qlife Holding. However, Media and Games is 1.95 times less risky than Qlife Holding. It trades about 0.09 of its potential returns per unit of risk. Qlife Holding AB is currently generating about -0.04 per unit of risk. If you would invest  3,635  in Media and Games on September 11, 2024 and sell it today you would earn a total of  570.00  from holding Media and Games or generate 15.68% return on investment over 90 days.

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

Media and Games  vs.  Qlife Holding AB

Media and Games

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Qlife Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qlife Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Media and Qlife Holding

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

The idea behind Media and Games and Qlife Holding 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.