Correlation Between Quipt Home and Winpak

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

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

Diversification Opportunities for Quipt Home and Winpak

-0.02

Correlation Coefficient

Quipt Home  Winpak

Good diversification

The 3 months correlation between Quipt and Winpak is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Quipt Home 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 Quipt Home Medical are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Quipt Home i.e., Quipt Home and Winpak go up and down completely randomly.

Pair Corralation between Quipt Home and Winpak

Assuming the 90 days trading horizon Quipt Home Medical is expected to generate 3.21 times more return on investment than Winpak. However, Quipt Home is 3.21 times more volatile than Winpak. It trades about 0.05 of its potential returns per unit of risk. Winpak is currently generating about -0.13 per unit of risk. If you would invest  335.00  in Quipt Home Medical on September 25, 2024 and sell it today you would earn a total of  10.00  from holding Quipt Home Medical or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Quipt Home Medical  vs.  Winpak

Quipt Home Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Winpak

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Quipt Home and Winpak

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

The idea behind Quipt Home Medical and Winpak 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.