Correlation Between Nates Food and Qed Connect

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

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

Diversification Opportunities for Nates Food and Qed Connect

0.0

Correlation Coefficient

Nates Food  Qed Connect

Pay attention - limited upside

The 3 months correlation between Nates and Qed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nates Food Co and Qed Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qed Connect and Nates Food 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 Nates Food Co 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 Nates Food i.e., Nates Food and Qed Connect go up and down completely randomly.

Pair Corralation between Nates Food and Qed Connect

Given the investment horizon of 90 days Nates Food is expected to generate 1.44 times less return on investment than Qed Connect. In addition to that, Nates Food is 1.21 times more volatile than Qed Connect. It trades about 0.03 of its total potential returns per unit of risk. Qed Connect is currently generating about 0.05 per unit of volatility. If you would invest  0.05  in Qed Connect on September 4, 2024 and sell it today you would lose (0.01) from holding Qed Connect or give up 20.0% of portfolio value over 90 days.

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

Nates Food Co  vs.  Qed Connect

Nates Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nates Food Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Nates Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Qed Connect

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nates Food and Qed Connect

The main advantage of trading using opposite Nates Food and Qed Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nates Food 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 Nates Food Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.