Correlation Between Major Drilling and Quorum Information

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

By analyzing existing cross correlation between Major Drilling Group and Quorum Information Technologies, you can compare the effects of market volatilities on Major Drilling and Quorum Information 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 Major Drilling with a short position of Quorum Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Quorum Information.

Diversification Opportunities for Major Drilling and Quorum Information

0.03

Correlation Coefficient

Major Drilling  Quorum Information

Significant diversification

The 3 months correlation between Major and Quorum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Quorum Information Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quorum Information and Major Drilling 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 Major Drilling Group are associated (or correlated) with Quorum Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quorum Information has no effect on the direction of Major Drilling i.e., Major Drilling and Quorum Information go up and down completely randomly.

Pair Corralation between Major Drilling and Quorum Information

Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Quorum Information. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.56 times less risky than Quorum Information. The stock trades about -0.02 of its potential returns per unit of risk. The Quorum Information Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Quorum Information Technologies on October 7, 2024 and sell it today you would earn a total of  21.00  from holding Quorum Information Technologies or generate 28.38% return on investment over 90 days.

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

Major Drilling Group  vs.  Quorum Information Technologie

Major Drilling Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Major Drilling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Major Drilling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Quorum Information

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quorum Information Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quorum Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Major Drilling and Quorum Information

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

The idea behind Major Drilling Group and Quorum Information Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.