Correlation Between Q2M Managementberatu and PLAYTECH

Can any of the company-specific risk be diversified away by investing in both Q2M Managementberatu and PLAYTECH 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 Q2M Managementberatu and PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2M Managementberatung AG and PLAYTECH, you can compare the effects of market volatilities on Q2M Managementberatu and PLAYTECH 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 Q2M Managementberatu with a short position of PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2M Managementberatu and PLAYTECH.

Diversification Opportunities for Q2M Managementberatu and PLAYTECH

-0.22

Correlation Coefficient

Q2M Managementberatu  PLAYTECH

Very good diversification

The 3 months correlation between Q2M and PLAYTECH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Q2M Managementberatung AG and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH and Q2M Managementberatu 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 Q2M Managementberatung AG are associated (or correlated) with PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Q2M Managementberatu i.e., Q2M Managementberatu and PLAYTECH go up and down completely randomly.

Pair Corralation between Q2M Managementberatu and PLAYTECH

Assuming the 90 days trading horizon Q2M Managementberatung AG is expected to under-perform the PLAYTECH. But the stock apears to be less risky and, when comparing its historical volatility, Q2M Managementberatung AG is 2.92 times less risky than PLAYTECH. The stock trades about -0.13 of its potential returns per unit of risk. The PLAYTECH is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  855.00  in PLAYTECH on December 30, 2024 and sell it today you would earn a total of  10.00  from holding PLAYTECH or generate 1.17% return on investment over 90 days.

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

Q2M Managementberatung AG  vs.  PLAYTECH

Q2M Managementberatung

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2M Managementberatung AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Q2M Managementberatu is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PLAYTECH

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTECH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Q2M Managementberatu and PLAYTECH

The main advantage of trading using opposite Q2M Managementberatu and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2M Managementberatu position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's long position.

The idea behind Q2M Managementberatung AG and PLAYTECH 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.