Correlation Between National CineMedia and Quantum BioPharma

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

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

Diversification Opportunities for National CineMedia and Quantum BioPharma

0.13

Correlation Coefficient

National CineMedia  Quantum BioPharma

Average diversification

The 3 months correlation between National and Quantum is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and National CineMedia 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 National CineMedia are associated (or correlated) with Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of National CineMedia i.e., National CineMedia and Quantum BioPharma go up and down completely randomly.

Pair Corralation between National CineMedia and Quantum BioPharma

Given the investment horizon of 90 days National CineMedia is expected to generate 2.62 times less return on investment than Quantum BioPharma. But when comparing it to its historical volatility, National CineMedia is 3.48 times less risky than Quantum BioPharma. It trades about 0.04 of its potential returns per unit of risk. Quantum BioPharma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  411.00  in Quantum BioPharma on October 8, 2024 and sell it today you would lose (10.00) from holding Quantum BioPharma or give up 2.43% of portfolio value over 90 days.

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

National CineMedia  vs.  Quantum BioPharma

National CineMedia

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quantum BioPharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum BioPharma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Quantum BioPharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National CineMedia and Quantum BioPharma

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

The idea behind National CineMedia and Quantum BioPharma 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.