Correlation Between True Public and QTC Energy

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

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

Diversification Opportunities for True Public and QTC Energy

-0.6

Correlation Coefficient

True Public  QTC Energy

Excellent diversification

The 3 months correlation between True and QTC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding True Public and QTC Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QTC Energy Public and True Public 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 True Public are associated (or correlated) with QTC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QTC Energy Public has no effect on the direction of True Public i.e., True Public and QTC Energy go up and down completely randomly.

Pair Corralation between True Public and QTC Energy

Assuming the 90 days trading horizon True Public is expected to generate 1.21 times more return on investment than QTC Energy. However, True Public is 1.21 times more volatile than QTC Energy Public. It trades about -0.01 of its potential returns per unit of risk. QTC Energy Public is currently generating about -0.07 per unit of risk. If you would invest  1,200  in True Public on September 13, 2024 and sell it today you would lose (10.00) from holding True Public or give up 0.83% of portfolio value over 90 days.

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

True Public  vs.  QTC Energy Public

True Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in True Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, True Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

QTC Energy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QTC Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, QTC Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with True Public and QTC Energy

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

The idea behind True Public and QTC Energy Public 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 Valuation module to check real value of public entities based on technical and fundamental data.