Correlation Between Nw Tech and QualTek Services

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

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

Diversification Opportunities for Nw Tech and QualTek Services

0.0

Correlation Coefficient

Nw Tech  QualTek Services

Pay attention - limited upside

The 3 months correlation between NWTT and QualTek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nw Tech Capital and QualTek Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QualTek Services and Nw Tech 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 Nw Tech Capital are associated (or correlated) with QualTek Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QualTek Services has no effect on the direction of Nw Tech i.e., Nw Tech and QualTek Services go up and down completely randomly.

Pair Corralation between Nw Tech and QualTek Services

Given the investment horizon of 90 days Nw Tech Capital is expected to generate 1.43 times more return on investment than QualTek Services. However, Nw Tech is 1.43 times more volatile than QualTek Services. It trades about 0.09 of its potential returns per unit of risk. QualTek Services is currently generating about -0.1 per unit of risk. If you would invest  0.04  in Nw Tech Capital on October 22, 2024 and sell it today you would lose (0.03) from holding Nw Tech Capital or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.43%
Values	Daily Returns

Nw Tech Capital  vs.  QualTek Services

Nw Tech Capital

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Nw Tech Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nw Tech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

QualTek Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QualTek Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, QualTek Services is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nw Tech and QualTek Services

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

The idea behind Nw Tech Capital and QualTek Services 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 Global Correlations module to find global opportunities by holding instruments from different markets.