Correlation Between Pick N and Quantum Foods

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Can any of the company-specific risk be diversified away by investing in both Pick N 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 Pick N and Quantum Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick N Pay and Quantum Foods Holdings, you can compare the effects of market volatilities on Pick N 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 Pick N with a short position of Quantum Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and Quantum Foods.

Diversification Opportunities for Pick N and Quantum Foods

PickQuantumDiversified AwayPickQuantumDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Pick and Quantum is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pick N Pay 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 Pick N 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 Pick N Pay 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 Pick N i.e., Pick N and Quantum Foods go up and down completely randomly.

Pair Corralation between Pick N and Quantum Foods

Assuming the 90 days trading horizon Pick N Pay is expected to generate 0.23 times more return on investment than Quantum Foods. However, Pick N Pay is 4.39 times less risky than Quantum Foods. It trades about 0.05 of its potential returns per unit of risk. Quantum Foods Holdings is currently generating about -0.05 per unit of risk. If you would invest  287,000  in Pick N Pay on November 25, 2024 and sell it today you would earn a total of  10,100  from holding Pick N Pay or generate 3.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.39%
ValuesDaily Returns

Pick N Pay  vs.  Quantum Foods Holdings

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 010203040
JavaScript chart by amCharts 3.21.15PIK QFH
       Timeline  
Pick N Pay 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pick N Pay are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pick N is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2,8002,9003,0003,1003,2003,3003,4003,500
Quantum Foods Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Quantum Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6007008009001,0001,1001,200

Pick N and Quantum Foods Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.17-3.87-2.57-1.280.02161.332.684.035.38 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15PIK QFH
       Returns  

Pair Trading with Pick N and Quantum Foods

The main advantage of trading using opposite Pick N and Quantum Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N 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.
The idea behind Pick N Pay and Quantum Foods Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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