Correlation Between PF Industries and QCR Holdings

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

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

Diversification Opportunities for PF Industries and QCR Holdings

0.75

Correlation Coefficient

PF Industries  QCR Holdings

Poor diversification

The 3 months correlation between PFIN and QCR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PF Industries and QCR Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QCR Holdings and PF Industries 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 PF Industries are associated (or correlated) with QCR Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QCR Holdings has no effect on the direction of PF Industries i.e., PF Industries and QCR Holdings go up and down completely randomly.

Pair Corralation between PF Industries and QCR Holdings

If you would invest  5,994  in QCR Holdings on September 13, 2024 and sell it today you would earn a total of  2,977  from holding QCR Holdings or generate 49.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.68%
Values	Daily Returns

PF Industries  vs.  QCR Holdings

PF Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

QCR Holdings

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QCR Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, QCR Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PF Industries and QCR Holdings

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

The idea behind PF Industries and QCR Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.