Correlation Between SPAR and Quantum Foods

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

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

Diversification Opportunities for SPAR and Quantum Foods

-0.56

Correlation Coefficient

SPAR  Quantum Foods

Excellent diversification

The 3 months correlation between SPAR and Quantum is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and Quantum Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Foods Holdings and SPAR 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 SPAR Group are associated (or correlated) with Quantum Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Foods Holdings has no effect on the direction of SPAR i.e., SPAR and Quantum Foods go up and down completely randomly.

Pair Corralation between SPAR and Quantum Foods

Assuming the 90 days trading horizon SPAR Group is expected to under-perform the Quantum Foods. But the stock apears to be less risky and, when comparing its historical volatility, SPAR Group is 7.75 times less risky than Quantum Foods. The stock trades about -0.12 of its potential returns per unit of risk. The Quantum Foods Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  89,900  in Quantum Foods Holdings on October 8, 2024 and sell it today you would earn a total of  1,700  from holding Quantum Foods Holdings or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SPAR Group  vs.  Quantum Foods Holdings

SPAR Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SPAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quantum Foods Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantum Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SPAR and Quantum Foods

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

The idea behind SPAR Group and Quantum Foods Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.