Correlation Between Quantum Software and 3R Games

Can any of the company-specific risk be diversified away by investing in both Quantum Software and 3R Games 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 Software and 3R Games into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quantum Software SA and 3R Games SA, you can compare the effects of market volatilities on Quantum Software and 3R Games 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 Software with a short position of 3R Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantum Software and 3R Games.

Diversification Opportunities for Quantum Software and 3R Games

0.39

Correlation Coefficient

Quantum Software  3R Games

Weak diversification

The 3 months correlation between Quantum and 3RG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Quantum Software SA and 3R Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3R Games SA and Quantum Software 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 Software SA are associated (or correlated) with 3R Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3R Games SA has no effect on the direction of Quantum Software i.e., Quantum Software and 3R Games go up and down completely randomly.

Pair Corralation between Quantum Software and 3R Games

Assuming the 90 days trading horizon Quantum Software is expected to generate 6.18 times less return on investment than 3R Games. But when comparing it to its historical volatility, Quantum Software SA is 1.74 times less risky than 3R Games. It trades about 0.05 of its potential returns per unit of risk. 3R Games SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  36.00  in 3R Games SA on December 30, 2024 and sell it today you would earn a total of  24.00  from holding 3R Games SA or generate 66.67% return on investment over 90 days.

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

Quantum Software SA  vs.  3R Games SA

Quantum Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Software SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Quantum Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

3R Games SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 3R Games SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, 3R Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantum Software and 3R Games

The main advantage of trading using opposite Quantum Software and 3R Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum Software position performs unexpectedly, 3R Games 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 3R Games will offset losses from the drop in 3R Games' long position.

The idea behind Quantum Software SA and 3R Games SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.