Correlation Between Pentagon I and Quarterhill

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

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

Diversification Opportunities for Pentagon I and Quarterhill

0.24

Correlation Coefficient

Pentagon I  Quarterhill

Modest diversification

The 3 months correlation between Pentagon and Quarterhill is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pentagon I Capital and Quarterhill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quarterhill and Pentagon I 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 Pentagon I Capital are associated (or correlated) with Quarterhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quarterhill has no effect on the direction of Pentagon I i.e., Pentagon I and Quarterhill go up and down completely randomly.

Pair Corralation between Pentagon I and Quarterhill

Assuming the 90 days trading horizon Pentagon I Capital is expected to under-perform the Quarterhill. In addition to that, Pentagon I is 2.79 times more volatile than Quarterhill. It trades about -0.1 of its total potential returns per unit of risk. Quarterhill is currently generating about -0.04 per unit of volatility. If you would invest  172.00  in Quarterhill on October 2, 2024 and sell it today you would lose (16.00) from holding Quarterhill or give up 9.3% of portfolio value over 90 days.

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

Pentagon I Capital  vs.  Quarterhill

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Quarterhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quarterhill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Pentagon I and Quarterhill

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

The idea behind Pentagon I Capital and Quarterhill 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.