Correlation Between Real Matters and Quarterhill

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

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

Diversification Opportunities for Real Matters and Quarterhill

0.49

Correlation Coefficient

Real Matters  Quarterhill

Very weak diversification

The 3 months correlation between Real and Quarterhill is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Real Matters and Quarterhill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quarterhill and Real Matters 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 Real Matters are associated (or correlated) with Quarterhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quarterhill has no effect on the direction of Real Matters i.e., Real Matters and Quarterhill go up and down completely randomly.

Pair Corralation between Real Matters and Quarterhill

Assuming the 90 days trading horizon Real Matters is expected to under-perform the Quarterhill. But the stock apears to be less risky and, when comparing its historical volatility, Real Matters is 1.77 times less risky than Quarterhill. The stock trades about -0.06 of its potential returns per unit of risk. The Quarterhill is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Quarterhill on September 5, 2024 and sell it today you would earn a total of  1.00  from holding Quarterhill or generate 0.61% return on investment over 90 days.

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

Real Matters  vs.  Quarterhill

Real Matters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Real Matters is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Quarterhill

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quarterhill are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Quarterhill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Real Matters and Quarterhill

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

The idea behind Real Matters and Quarterhill 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.