Correlation Between Universe Pharmaceuticals and Quantum BioPharma

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

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

Diversification Opportunities for Universe Pharmaceuticals and Quantum BioPharma

0.71

Correlation Coefficient

Universe Pharmaceuticals  Quantum BioPharma

Poor diversification

The 3 months correlation between Universe and Quantum is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Universe Pharmaceuticals and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and Universe Pharmaceuticals 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 Universe Pharmaceuticals are associated (or correlated) with Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Universe Pharmaceuticals i.e., Universe Pharmaceuticals and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Universe Pharmaceuticals and Quantum BioPharma

Considering the 90-day investment horizon Universe Pharmaceuticals is expected to under-perform the Quantum BioPharma. In addition to that, Universe Pharmaceuticals is 1.69 times more volatile than Quantum BioPharma. It trades about -0.04 of its total potential returns per unit of risk. Quantum BioPharma is currently generating about -0.04 per unit of volatility. If you would invest  2,470  in Quantum BioPharma on October 9, 2024 and sell it today you would lose (2,086) from holding Quantum BioPharma or give up 84.45% of portfolio value over 90 days.

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

Universe Pharmaceuticals  vs.  Quantum BioPharma

Universe Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universe Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Universe Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Quantum BioPharma

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Universe Pharmaceuticals and Quantum BioPharma

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

The idea behind Universe Pharmaceuticals and Quantum BioPharma 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.