Correlation Between Queens Road and Uniteds

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

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

Diversification Opportunities for Queens Road and Uniteds

-0.26

Correlation Coefficient

Queens Road  Uniteds

Very good diversification

The 3 months correlation between Queens and Uniteds is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and Uniteds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniteds Limited and Queens Road 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 Queens Road Capital are associated (or correlated) with Uniteds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniteds Limited has no effect on the direction of Queens Road i.e., Queens Road and Uniteds go up and down completely randomly.

Pair Corralation between Queens Road and Uniteds

Assuming the 90 days trading horizon Queens Road Capital is expected to generate 2.12 times more return on investment than Uniteds. However, Queens Road is 2.12 times more volatile than Uniteds Limited. It trades about 0.08 of its potential returns per unit of risk. Uniteds Limited is currently generating about 0.09 per unit of risk. If you would invest  700.00  in Queens Road Capital on October 21, 2024 and sell it today you would earn a total of  30.00  from holding Queens Road Capital or generate 4.29% return on investment over 90 days.

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

Queens Road Capital  vs.  Uniteds Limited

Queens Road Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queens Road Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Uniteds Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniteds Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Uniteds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Queens Road and Uniteds

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

The idea behind Queens Road Capital and Uniteds Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.