Correlation Between Quebecor and Holmen AB

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

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

Diversification Opportunities for Quebecor and Holmen AB

0.87

Correlation Coefficient

Quebecor  Holmen AB

Very poor diversification

The 3 months correlation between Quebecor and Holmen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Quebecor and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and Quebecor 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 Quebecor are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Quebecor i.e., Quebecor and Holmen AB go up and down completely randomly.

Pair Corralation between Quebecor and Holmen AB

Assuming the 90 days horizon Quebecor is expected to generate 0.94 times more return on investment than Holmen AB. However, Quebecor is 1.07 times less risky than Holmen AB. It trades about 0.18 of its potential returns per unit of risk. Holmen AB is currently generating about 0.14 per unit of risk. If you would invest  2,040  in Quebecor on December 23, 2024 and sell it today you would earn a total of  260.00  from holding Quebecor or generate 12.75% return on investment over 90 days.

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

Quebecor  vs.  Holmen AB

Quebecor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quebecor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Quebecor reported solid returns over the last few months and may actually be approaching a breakup point.

Holmen AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holmen AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Holmen AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Quebecor and Holmen AB

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

The idea behind Quebecor and Holmen AB 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.