Correlation Between Quality Industrial and Rosinbomb

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

Diversification Opportunities for Quality Industrial and Rosinbomb

-0.87

Correlation Coefficient

Quality Industrial  Rosinbomb

Pay attention - limited upside

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

Pair Corralation between Quality Industrial and Rosinbomb

Given the investment horizon of 90 days Quality Industrial Corp is expected to under-perform the Rosinbomb. In addition to that, Quality Industrial is 1.04 times more volatile than Rosinbomb. It trades about -0.14 of its total potential returns per unit of risk. Rosinbomb is currently generating about 0.2 per unit of volatility. If you would invest  0.40  in Rosinbomb on December 29, 2024 and sell it today you would earn a total of  0.59  from holding Rosinbomb or generate 147.5% return on investment over 90 days.

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

Quality Industrial Corp  vs.  Rosinbomb

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rosinbomb

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rosinbomb are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Rosinbomb displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quality Industrial and Rosinbomb

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

The idea behind Quality Industrial Corp and Rosinbomb 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.