Correlation Between Nichirei and Qed Connect

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

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

Diversification Opportunities for Nichirei and Qed Connect

-0.38

Correlation Coefficient

Nichirei  Qed Connect

Very good diversification

The 3 months correlation between Nichirei and Qed is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nichirei and Qed Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qed Connect and Nichirei 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 Nichirei are associated (or correlated) with Qed Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qed Connect has no effect on the direction of Nichirei i.e., Nichirei and Qed Connect go up and down completely randomly.

Pair Corralation between Nichirei and Qed Connect

Assuming the 90 days horizon Nichirei is expected to generate 11.36 times less return on investment than Qed Connect. But when comparing it to its historical volatility, Nichirei is 90.55 times less risky than Qed Connect. It trades about 0.13 of its potential returns per unit of risk. Qed Connect is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Qed Connect on September 26, 2024 and sell it today you would lose (0.02) from holding Qed Connect or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Nichirei  vs.  Qed Connect

Nichirei

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nichirei are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Qed Connect

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qed Connect are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Qed Connect displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nichirei and Qed Connect

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

The idea behind Nichirei and Qed Connect 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..