Correlation Between QT Imaging and Cadence Design

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

By analyzing existing cross correlation between QT Imaging Holdings and Cadence Design Systems, you can compare the effects of market volatilities on QT Imaging and Cadence Design 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 Imaging with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of QT Imaging and Cadence Design.

Diversification Opportunities for QT Imaging and Cadence Design

-0.14

Correlation Coefficient

QT Imaging  Cadence Design

Good diversification

The 3 months correlation between QTI and Cadence is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding QT Imaging Holdings and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems and QT Imaging 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 Imaging Holdings are associated (or correlated) with Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of QT Imaging i.e., QT Imaging and Cadence Design go up and down completely randomly.

Pair Corralation between QT Imaging and Cadence Design

Considering the 90-day investment horizon QT Imaging Holdings is expected to generate 5.22 times more return on investment than Cadence Design. However, QT Imaging is 5.22 times more volatile than Cadence Design Systems. It trades about 0.13 of its potential returns per unit of risk. Cadence Design Systems is currently generating about -0.09 per unit of risk. If you would invest  36.00  in QT Imaging Holdings on December 26, 2024 and sell it today you would earn a total of  25.18  from holding QT Imaging Holdings or generate 69.93% return on investment over 90 days.

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

QT Imaging Holdings  vs.  Cadence Design Systems

QT Imaging Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QT Imaging Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, QT Imaging demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cadence Design Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadence Design Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with QT Imaging and Cadence Design

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

The idea behind QT Imaging Holdings and Cadence Design Systems 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.