Correlation Between Quantum and Cemtrex

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

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

Diversification Opportunities for Quantum and Cemtrex

-0.35

Correlation Coefficient

Quantum  Cemtrex

Very good diversification

The 3 months correlation between Quantum and Cemtrex is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Cemtrex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemtrex and Quantum 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 Quantum are associated (or correlated) with Cemtrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemtrex has no effect on the direction of Quantum i.e., Quantum and Cemtrex go up and down completely randomly.

Pair Corralation between Quantum and Cemtrex

Given the investment horizon of 90 days Quantum is expected to generate 1.67 times less return on investment than Cemtrex. But when comparing it to its historical volatility, Quantum is 4.03 times less risky than Cemtrex. It trades about 0.04 of its potential returns per unit of risk. Cemtrex is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  730,590  in Cemtrex on September 13, 2024 and sell it today you would lose (730,260) from holding Cemtrex or give up 99.95% of portfolio value over 90 days.

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

Quantum  vs.  Cemtrex

Quantum

Risk-Adjusted Performance

15 of 100

Good

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

Cemtrex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtrex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Quantum and Cemtrex

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

The idea behind Quantum and Cemtrex 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.