Correlation Between Quality Industrial and Next Hydrogen

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

By analyzing existing cross correlation between Quality Industrial Corp and Next Hydrogen Solutions, you can compare the effects of market volatilities on Quality Industrial and Next Hydrogen 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 Quality Industrial with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Industrial and Next Hydrogen.

Diversification Opportunities for Quality Industrial and Next Hydrogen

-0.75

Correlation Coefficient

Quality Industrial  Next Hydrogen

Pay attention - limited upside

The 3 months correlation between Quality and Next is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Quality Industrial Corp and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Quality Industrial 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 Quality Industrial Corp are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Quality Industrial i.e., Quality Industrial and Next Hydrogen go up and down completely randomly.

Pair Corralation between Quality Industrial and Next Hydrogen

Given the investment horizon of 90 days Quality Industrial Corp is expected to under-perform the Next Hydrogen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Quality Industrial Corp is 1.69 times less risky than Next Hydrogen. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Next Hydrogen Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Next Hydrogen Solutions on November 29, 2024 and sell it today you would earn a total of  15.00  from holding Next Hydrogen Solutions or generate 33.33% return on investment over 90 days.

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

Quality Industrial Corp  vs.  Next Hydrogen Solutions

Quality Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Next Hydrogen Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Next Hydrogen Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Next Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quality Industrial and Next Hydrogen

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

The idea behind Quality Industrial Corp and Next Hydrogen Solutions 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.