Correlation Between QualTek Services and Consolidated Communications

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

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

Diversification Opportunities for QualTek Services and Consolidated Communications

-0.58

Correlation Coefficient

QualTek Services  Consolidated Communications

Excellent diversification

The 3 months correlation between QualTek and Consolidated is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding QualTek Services and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and QualTek Services 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 QualTek Services are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of QualTek Services i.e., QualTek Services and Consolidated Communications go up and down completely randomly.

Pair Corralation between QualTek Services and Consolidated Communications

If you would invest  462.00  in Consolidated Communications on October 7, 2024 and sell it today you would earn a total of  10.00  from holding Consolidated Communications or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.72%
Values	Daily Returns

QualTek Services  vs.  Consolidated Communications

QualTek Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QualTek Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, QualTek Services is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Consolidated Communications

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Consolidated Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with QualTek Services and Consolidated Communications

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

The idea behind QualTek Services and Consolidated Communications 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.