Correlation Between Madison Square and QMMM Holdings

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

By analyzing existing cross correlation between Madison Square Garden and QMMM Holdings Limited, you can compare the effects of market volatilities on Madison Square and QMMM Holdings 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 Madison Square with a short position of QMMM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and QMMM Holdings.

Diversification Opportunities for Madison Square and QMMM Holdings

0.8

Correlation Coefficient

Madison Square  QMMM Holdings

Very poor diversification

The 3 months correlation between Madison and QMMM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and QMMM Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QMMM Holdings Limited and Madison Square 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 Madison Square Garden are associated (or correlated) with QMMM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QMMM Holdings Limited has no effect on the direction of Madison Square i.e., Madison Square and QMMM Holdings go up and down completely randomly.

Pair Corralation between Madison Square and QMMM Holdings

Given the investment horizon of 90 days Madison Square Garden is expected to generate 0.13 times more return on investment than QMMM Holdings. However, Madison Square Garden is 7.95 times less risky than QMMM Holdings. It trades about -0.13 of its potential returns per unit of risk. QMMM Holdings Limited is currently generating about -0.05 per unit of risk. If you would invest  4,265  in Madison Square Garden on October 9, 2024 and sell it today you would lose (779.00) from holding Madison Square Garden or give up 18.26% of portfolio value over 90 days.

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

Madison Square Garden  vs.  QMMM Holdings Limited

Madison Square Garden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison Square Garden 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

QMMM Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QMMM Holdings Limited 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 primary 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 Madison Square and QMMM Holdings

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

The idea behind Madison Square Garden and QMMM Holdings Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.