Correlation Between Richelieu Hardware and Queens Road

Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Queens Road 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 Richelieu Hardware and Queens Road into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Richelieu Hardware and Queens Road Capital, you can compare the effects of market volatilities on Richelieu Hardware and Queens Road 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 Richelieu Hardware with a short position of Queens Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Queens Road.

Diversification Opportunities for Richelieu Hardware and Queens Road

0.82

Correlation Coefficient

Richelieu Hardware  Queens Road

Very poor diversification

The 3 months correlation between Richelieu and Queens is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Queens Road Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queens Road Capital and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with Queens Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queens Road Capital has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Queens Road go up and down completely randomly.

Pair Corralation between Richelieu Hardware and Queens Road

Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 0.72 times more return on investment than Queens Road. However, Richelieu Hardware is 1.38 times less risky than Queens Road. It trades about -0.14 of its potential returns per unit of risk. Queens Road Capital is currently generating about -0.11 per unit of risk. If you would invest  3,888  in Richelieu Hardware on December 24, 2024 and sell it today you would lose (533.00) from holding Richelieu Hardware or give up 13.71% of portfolio value over 90 days.

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

Richelieu Hardware  vs.  Queens Road Capital

Richelieu Hardware

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richelieu Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Queens Road Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Queens Road Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Richelieu Hardware and Queens Road

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

The idea behind Richelieu Hardware and Queens Road Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.