Correlation Between British Amer and Quantum Foods
Can any of the company-specific risk be diversified away by investing in both British Amer and Quantum Foods 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 British Amer and Quantum Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Quantum Foods Holdings, you can compare the effects of market volatilities on British Amer and Quantum Foods 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 British Amer with a short position of Quantum Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Quantum Foods.
Diversification Opportunities for British Amer and Quantum Foods
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Quantum is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Quantum Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Foods Holdings and British Amer 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 British American Tobacco are associated (or correlated) with Quantum Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Foods Holdings has no effect on the direction of British Amer i.e., British Amer and Quantum Foods go up and down completely randomly.
Pair Corralation between British Amer and Quantum Foods
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.23 times more return on investment than Quantum Foods. However, British American Tobacco is 4.4 times less risky than Quantum Foods. It trades about 0.3 of its potential returns per unit of risk. Quantum Foods Holdings is currently generating about -0.14 per unit of risk. If you would invest 6,891,200 in British American Tobacco on November 9, 2024 and sell it today you would earn a total of 757,900 from holding British American Tobacco or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Quantum Foods Holdings
Performance |
| Timeline |
| British American Tobacco |
| Quantum Foods Holdings |
British Amer and Quantum Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Quantum Foods
The main advantage of trading using opposite British Amer and Quantum Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Quantum Foods 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 Foods will offset losses from the drop in Quantum Foods' long position.| British Amer vs. Kap Industrial Holdings | British Amer vs. African Media Entertainment | British Amer vs. Master Drilling Group | British Amer vs. CA Sales Holdings |
| Quantum Foods vs. RCL Foods | Quantum Foods vs. CA Sales Holdings | Quantum Foods vs. Blue Label Telecoms | Quantum Foods vs. ABSA Bank Limited |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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