Correlation Between QRTEA Old and Chimera Investment

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

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

Diversification Opportunities for QRTEA Old and Chimera Investment

-0.39

Correlation Coefficient

QRTEA Old  Chimera Investment

Very good diversification

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

Pair Corralation between QRTEA Old and Chimera Investment

Assuming the 90 days horizon QRTEA Old is expected to generate 13.56 times more return on investment than Chimera Investment. However, QRTEA Old is 13.56 times more volatile than Chimera Investment. It trades about 0.08 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.04 per unit of risk. If you would invest  33.00  in QRTEA Old on December 30, 2024 and sell it today you would earn a total of  3.00  from holding QRTEA Old or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.68%
Values	Daily Returns

QRTEA Old  vs.  Chimera Investment

QRTEA Old

Risk-Adjusted Performance

Modest

Over the last 90 days QRTEA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, QRTEA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Chimera Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Chimera Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with QRTEA Old and Chimera Investment

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

The idea behind QRTEA Old and Chimera Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.