Correlation Between Q2 Holdings and Freightos Limited

Can any of the company-specific risk be diversified away by investing in both Q2 Holdings and Freightos Limited 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 Q2 Holdings and Freightos Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2 Holdings and Freightos Limited Warrants, you can compare the effects of market volatilities on Q2 Holdings and Freightos Limited 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 Q2 Holdings with a short position of Freightos Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2 Holdings and Freightos Limited.

Diversification Opportunities for Q2 Holdings and Freightos Limited

0.13

Correlation Coefficient

Q2 Holdings  Freightos Limited

Average diversification

The 3 months correlation between QTWO and Freightos is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Q2 Holdings and Freightos Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightos Limited and Q2 Holdings 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 Q2 Holdings are associated (or correlated) with Freightos Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightos Limited has no effect on the direction of Q2 Holdings i.e., Q2 Holdings and Freightos Limited go up and down completely randomly.

Pair Corralation between Q2 Holdings and Freightos Limited

Given the investment horizon of 90 days Q2 Holdings is expected to generate 16.96 times less return on investment than Freightos Limited. But when comparing it to its historical volatility, Q2 Holdings is 21.4 times less risky than Freightos Limited. It trades about 0.09 of its potential returns per unit of risk. Freightos Limited Warrants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Freightos Limited Warrants on October 11, 2024 and sell it today you would lose (54.00) from holding Freightos Limited Warrants or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.4%
Values	Daily Returns

Q2 Holdings  vs.  Freightos Limited Warrants

Q2 Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Freightos Limited

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Q2 Holdings and Freightos Limited

The main advantage of trading using opposite Q2 Holdings and Freightos Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2 Holdings position performs unexpectedly, Freightos Limited 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 Freightos Limited will offset losses from the drop in Freightos Limited's long position.

The idea behind Q2 Holdings and Freightos Limited Warrants 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.