Correlation Between Rapid7 and Arqit Quantum

Can any of the company-specific risk be diversified away by investing in both Rapid7 and Arqit Quantum 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 Rapid7 and Arqit Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rapid7 Inc and Arqit Quantum, you can compare the effects of market volatilities on Rapid7 and Arqit Quantum 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 Rapid7 with a short position of Arqit Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapid7 and Arqit Quantum.

Diversification Opportunities for Rapid7 and Arqit Quantum

0.73

Correlation Coefficient

Rapid7  Arqit Quantum

Poor diversification

The 3 months correlation between Rapid7 and Arqit is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rapid7 Inc and Arqit Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arqit Quantum and Rapid7 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 Rapid7 Inc are associated (or correlated) with Arqit Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arqit Quantum has no effect on the direction of Rapid7 i.e., Rapid7 and Arqit Quantum go up and down completely randomly.

Pair Corralation between Rapid7 and Arqit Quantum

Considering the 90-day investment horizon Rapid7 Inc is expected to generate 0.18 times more return on investment than Arqit Quantum. However, Rapid7 Inc is 5.56 times less risky than Arqit Quantum. It trades about -0.24 of its potential returns per unit of risk. Arqit Quantum is currently generating about -0.07 per unit of risk. If you would invest  4,019  in Rapid7 Inc on December 27, 2024 and sell it today you would lose (1,148) from holding Rapid7 Inc or give up 28.56% of portfolio value over 90 days.

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

Rapid7 Inc  vs.  Arqit Quantum

Rapid7 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rapid7 Inc 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arqit Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arqit Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Rapid7 and Arqit Quantum

The main advantage of trading using opposite Rapid7 and Arqit Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rapid7 position performs unexpectedly, Arqit Quantum 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 Arqit Quantum will offset losses from the drop in Arqit Quantum's long position.

The idea behind Rapid7 Inc and Arqit Quantum 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.