Correlation Between Queens Road and Stroud Resources
Can any of the company-specific risk be diversified away by investing in both Queens Road and Stroud Resources 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 Queens Road and Stroud Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Queens Road Capital and Stroud Resources, you can compare the effects of market volatilities on Queens Road and Stroud Resources 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 Queens Road with a short position of Stroud Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and Stroud Resources.
Diversification Opportunities for Queens Road and Stroud Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Queens and Stroud is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and Stroud Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stroud Resources and Queens Road 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 Queens Road Capital are associated (or correlated) with Stroud Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stroud Resources has no effect on the direction of Queens Road i.e., Queens Road and Stroud Resources go up and down completely randomly.
Pair Corralation between Queens Road and Stroud Resources
Assuming the 90 days trading horizon Queens Road Capital is expected to under-perform the Stroud Resources. But the stock apears to be less risky and, when comparing its historical volatility, Queens Road Capital is 3.63 times less risky than Stroud Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Stroud Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Stroud Resources on November 3, 2024 and sell it today you would earn a total of 0.50 from holding Stroud Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Queens Road Capital vs. Stroud Resources
Performance |
| Timeline |
| Queens Road Capital |
| Stroud Resources |
Queens Road and Stroud Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Queens Road and Stroud Resources
The main advantage of trading using opposite Queens Road and Stroud Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road position performs unexpectedly, Stroud Resources 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 Stroud Resources will offset losses from the drop in Stroud Resources' long position.The idea behind Queens Road Capital and Stroud Resources 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.| Stroud Resources vs. Partners Value Investments | Stroud Resources vs. TGS Esports | Stroud Resources vs. Economic Investment Trust | Stroud Resources vs. Profound Medical Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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