Correlation Between Red Cat and Quantum Computing

Can any of the company-specific risk be diversified away by investing in both Red Cat and Quantum Computing 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 Red Cat and Quantum Computing into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Red Cat and Quantum Computing

0.73

Correlation Coefficient

Red Cat  Quantum Computing

Poor diversification

The 3 months correlation between Red and Quantum is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Quantum Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Computing and Red Cat 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 Red Cat Holdings are associated (or correlated) with Quantum Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Computing has no effect on the direction of Red Cat i.e., Red Cat and Quantum Computing go up and down completely randomly.

Pair Corralation between Red Cat and Quantum Computing

Given the investment horizon of 90 days Red Cat Holdings is expected to under-perform the Quantum Computing. But the stock apears to be less risky and, when comparing its historical volatility, Red Cat Holdings is 1.77 times less risky than Quantum Computing. The stock trades about -0.16 of its potential returns per unit of risk. The Quantum Computing is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,854  in Quantum Computing on December 28, 2024 and sell it today you would lose (1,060) from holding Quantum Computing or give up 57.17% of portfolio value over 90 days.

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

Red Cat Holdings  vs.  Quantum Computing

Red Cat Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Cat Holdings 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.

Quantum Computing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum Computing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers 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 Red Cat and Quantum Computing

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

The idea behind Red Cat Holdings and Quantum Computing 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.