Correlation Between Qwest Corp and City Developments

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

By analyzing existing cross correlation between Qwest Corp NT and City Developments Limited, you can compare the effects of market volatilities on Qwest Corp and City Developments 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 Qwest Corp with a short position of City Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qwest Corp and City Developments.

Diversification Opportunities for Qwest Corp and City Developments

-0.34

Correlation Coefficient

Qwest Corp  City Developments

Very good diversification

The 3 months correlation between Qwest and City is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Qwest Corp NT and City Developments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Qwest Corp 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 Qwest Corp NT are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Qwest Corp i.e., Qwest Corp and City Developments go up and down completely randomly.

Pair Corralation between Qwest Corp and City Developments

Given the investment horizon of 90 days Qwest Corp NT is expected to under-perform the City Developments. In addition to that, Qwest Corp is 2.34 times more volatile than City Developments Limited. It trades about -0.03 of its total potential returns per unit of risk. City Developments Limited is currently generating about -0.03 per unit of volatility. If you would invest  534.00  in City Developments Limited on February 13, 2024 and sell it today you would lose (92.00) from holding City Developments Limited or give up 17.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.05%
Values	Daily Returns

Qwest Corp NT  vs.  City Developments Limited

Qwest Corp NT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qwest Corp NT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Qwest Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

City Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Developments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Qwest Corp and City Developments

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

The idea behind Qwest Corp NT and City Developments Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.