Correlation Between Weir Group and Quality Industrial

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

By analyzing existing cross correlation between Weir Group PLC and Quality Industrial Corp, you can compare the effects of market volatilities on Weir Group and Quality Industrial 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 Weir Group with a short position of Quality Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir Group and Quality Industrial.

Diversification Opportunities for Weir Group and Quality Industrial

-0.54

Correlation Coefficient

Weir Group  Quality Industrial

Excellent diversification

The 3 months correlation between Weir and Quality is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC and Quality Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Industrial Corp and Weir Group 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 Weir Group PLC are associated (or correlated) with Quality Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Industrial Corp has no effect on the direction of Weir Group i.e., Weir Group and Quality Industrial go up and down completely randomly.

Pair Corralation between Weir Group and Quality Industrial

Assuming the 90 days horizon Weir Group PLC is expected to generate 0.16 times more return on investment than Quality Industrial. However, Weir Group PLC is 6.31 times less risky than Quality Industrial. It trades about 0.15 of its potential returns per unit of risk. Quality Industrial Corp is currently generating about -0.19 per unit of risk. If you would invest  1,355  in Weir Group PLC on December 2, 2024 and sell it today you would earn a total of  137.00  from holding Weir Group PLC or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Weir Group PLC  vs.  Quality Industrial Corp

Weir Group PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weir Group PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Weir Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Quality Industrial Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Weir Group and Quality Industrial

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

The idea behind Weir Group PLC and Quality Industrial Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..