Correlation Between Quorum Information and InPlay Oil

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

By analyzing existing cross correlation between Quorum Information Technologies and InPlay Oil Corp, you can compare the effects of market volatilities on Quorum Information and InPlay Oil 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 Quorum Information with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quorum Information and InPlay Oil.

Diversification Opportunities for Quorum Information and InPlay Oil

-0.2

Correlation Coefficient

Quorum Information  InPlay Oil

Good diversification

The 3 months correlation between Quorum and InPlay is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Quorum Information Technologie and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Quorum Information 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 Quorum Information Technologies are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Quorum Information i.e., Quorum Information and InPlay Oil go up and down completely randomly.

Pair Corralation between Quorum Information and InPlay Oil

Assuming the 90 days horizon Quorum Information Technologies is expected to generate 1.16 times more return on investment than InPlay Oil. However, Quorum Information is 1.16 times more volatile than InPlay Oil Corp. It trades about 0.02 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about 0.01 per unit of risk. If you would invest  94.00  in Quorum Information Technologies on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Quorum Information Technologies or generate 1.06% return on investment over 90 days.

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

Quorum Information Technologie  vs.  InPlay Oil Corp

Quorum Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quorum Information Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Quorum Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

InPlay Oil Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Quorum Information and InPlay Oil

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

The idea behind Quorum Information Technologies and InPlay Oil Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.