Correlation Between QEP and PF Industries

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

Diversification Opportunities for QEP and PF Industries

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between QEP and PFIN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding QEP Co Inc and PF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PF Industries and QEP 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 QEP Co Inc are associated (or correlated) with PF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PF Industries has no effect on the direction of QEP i.e., QEP and PF Industries go up and down completely randomly.

Pair Corralation between QEP and PF Industries

Given the investment horizon of 90 days QEP is expected to generate 2.25 times less return on investment than PF Industries. In addition to that, QEP is 2.7 times more volatile than PF Industries. It trades about 0.02 of its total potential returns per unit of risk. PF Industries is currently generating about 0.11 per unit of volatility. If you would invest  512.00  in PF Industries on August 25, 2024 and sell it today you would earn a total of  204.00  from holding PF Industries or generate 39.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

QEP Co Inc  vs.  PF Industries

 Performance 
       Timeline  
QEP Co Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days QEP Co Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, QEP is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
PF Industries 

Risk-Adjusted Performance

0 of 100

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

QEP and PF Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with QEP and PF Industries

The main advantage of trading using opposite QEP and PF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QEP position performs unexpectedly, PF Industries 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 PF Industries will offset losses from the drop in PF Industries' long position.
The idea behind QEP Co Inc and PF Industries 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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