Correlation Between Superior Resources and Qantas Airways

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

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

Diversification Opportunities for Superior Resources and Qantas Airways

-0.06

Correlation Coefficient

Superior Resources  Qantas Airways

Good diversification

The 3 months correlation between Superior and Qantas is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Superior Resources and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways and Superior Resources 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 Superior Resources are associated (or correlated) with Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Superior Resources i.e., Superior Resources and Qantas Airways go up and down completely randomly.

Pair Corralation between Superior Resources and Qantas Airways

Assuming the 90 days trading horizon Superior Resources is expected to generate 6.15 times more return on investment than Qantas Airways. However, Superior Resources is 6.15 times more volatile than Qantas Airways. It trades about 0.05 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.13 per unit of risk. If you would invest  0.60  in Superior Resources on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Superior Resources or generate 0.0% return on investment over 90 days.

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

Superior Resources  vs.  Qantas Airways

Superior Resources

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Superior Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Qantas Airways

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Qantas Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Resources and Qantas Airways

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

The idea behind Superior Resources and Qantas Airways 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.