Correlation Between Qantas Airways and Parkd

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

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

Diversification Opportunities for Qantas Airways and Parkd

-0.45

Correlation Coefficient

Qantas Airways  Parkd

Very good diversification

The 3 months correlation between Qantas and Parkd is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways and Parkd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkd and Qantas Airways 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 Qantas Airways are associated (or correlated) with Parkd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkd has no effect on the direction of Qantas Airways i.e., Qantas Airways and Parkd go up and down completely randomly.

Pair Corralation between Qantas Airways and Parkd

Assuming the 90 days trading horizon Qantas Airways is expected to generate 0.57 times more return on investment than Parkd. However, Qantas Airways is 1.77 times less risky than Parkd. It trades about 0.29 of its potential returns per unit of risk. Parkd is currently generating about -0.01 per unit of risk. If you would invest  717.00  in Qantas Airways on October 11, 2024 and sell it today you would earn a total of  211.00  from holding Qantas Airways or generate 29.43% return on investment over 90 days.

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

Qantas Airways  vs.  Parkd

Qantas Airways

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Qantas Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Parkd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qantas Airways and Parkd

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

The idea behind Qantas Airways and Parkd 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.