Correlation Between Stampede Drilling and Quipt Home

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

By analyzing existing cross correlation between Stampede Drilling and Quipt Home Medical, you can compare the effects of market volatilities on Stampede Drilling and Quipt Home 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 Stampede Drilling with a short position of Quipt Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and Quipt Home.

Diversification Opportunities for Stampede Drilling and Quipt Home

-0.27

Correlation Coefficient

Stampede Drilling  Quipt Home

Very good diversification

The 3 months correlation between Stampede and Quipt is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Quipt Home Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quipt Home Medical and Stampede Drilling 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 Stampede Drilling are associated (or correlated) with Quipt Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quipt Home Medical has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Quipt Home go up and down completely randomly.

Pair Corralation between Stampede Drilling and Quipt Home

Assuming the 90 days horizon Stampede Drilling is expected to generate 1.04 times more return on investment than Quipt Home. However, Stampede Drilling is 1.04 times more volatile than Quipt Home Medical. It trades about -0.01 of its potential returns per unit of risk. Quipt Home Medical is currently generating about -0.03 per unit of risk. If you would invest  25.00  in Stampede Drilling on October 21, 2024 and sell it today you would lose (6.00) from holding Stampede Drilling or give up 24.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.65%
Values	Daily Returns

Stampede Drilling  vs.  Quipt Home Medical

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Quipt Home Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stampede Drilling and Quipt Home

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

The idea behind Stampede Drilling and Quipt Home Medical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.