Correlation Between Qt Group and Nanoform Finland

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

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

Diversification Opportunities for Qt Group and Nanoform Finland

0.7

Correlation Coefficient

Qt Group  Nanoform Finland

Poor diversification

The 3 months correlation between QTCOM and Nanoform is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Qt Group Oyj and Nanoform Finland Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanoform Finland Plc and Qt Group 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 Qt Group Oyj are associated (or correlated) with Nanoform Finland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanoform Finland Plc has no effect on the direction of Qt Group i.e., Qt Group and Nanoform Finland go up and down completely randomly.

Pair Corralation between Qt Group and Nanoform Finland

Assuming the 90 days trading horizon Qt Group is expected to generate 1.34 times less return on investment than Nanoform Finland. But when comparing it to its historical volatility, Qt Group Oyj is 1.54 times less risky than Nanoform Finland. It trades about 0.09 of its potential returns per unit of risk. Nanoform Finland Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Nanoform Finland Plc on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Nanoform Finland Plc or generate 3.73% return on investment over 90 days.

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

Qt Group Oyj  vs.  Nanoform Finland Plc

Qt Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nanoform Finland Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanoform Finland Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Qt Group and Nanoform Finland

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

The idea behind Qt Group Oyj and Nanoform Finland Plc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.