Correlation Between Q2M Managementberatu and Transportadora

Can any of the company-specific risk be diversified away by investing in both Q2M Managementberatu and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Q2M Managementberatu and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2M Managementberatu and Transportadora.

Diversification Opportunities for Q2M Managementberatu and Transportadora

0.25

Correlation Coefficient

Q2M Managementberatu  Transportadora

Modest diversification

The 3 months correlation between Q2M and Transportadora is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Q2M Managementberatung AG and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Q2M Managementberatu i.e., Q2M Managementberatu and Transportadora go up and down completely randomly.

Pair Corralation between Q2M Managementberatu and Transportadora

Assuming the 90 days trading horizon Q2M Managementberatung AG is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Q2M Managementberatung AG is 8.98 times less risky than Transportadora. The stock trades about -0.17 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,740  in Transportadora de Gas on December 24, 2024 and sell it today you would lose (300.00) from holding Transportadora de Gas or give up 10.95% of portfolio value over 90 days.

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

Q2M Managementberatung AG  vs.  Transportadora de Gas

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 latest uncertain performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Transportadora is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Q2M Managementberatu and Transportadora

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

The idea behind Q2M Managementberatung AG and Transportadora de Gas 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.