Correlation Between QPR Software and Exel Composites

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

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

Diversification Opportunities for QPR Software and Exel Composites

0.37

Correlation Coefficient

QPR Software  Exel Composites

Weak diversification

The 3 months correlation between QPR and Exel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding QPR Software Oyj and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites Oyj and QPR 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 QPR Software Oyj are associated (or correlated) with Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of QPR Software i.e., QPR Software and Exel Composites go up and down completely randomly.

Pair Corralation between QPR Software and Exel Composites

Assuming the 90 days trading horizon QPR Software Oyj is expected to under-perform the Exel Composites. But the stock apears to be less risky and, when comparing its historical volatility, QPR Software Oyj is 1.01 times less risky than Exel Composites. The stock trades about -0.03 of its potential returns per unit of risk. The Exel Composites Oyj is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Exel Composites Oyj on September 5, 2024 and sell it today you would lose (1.00) from holding Exel Composites Oyj or give up 3.12% of portfolio value over 90 days.

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

QPR Software Oyj  vs.  Exel Composites Oyj

QPR Software Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QPR Software Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, QPR Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Exel Composites Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exel Composites Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with QPR Software and Exel Composites

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

The idea behind QPR Software Oyj and Exel Composites Oyj 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..