Correlation Between Qt Group and Optomed PLC

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

Diversification Opportunities for Qt Group and Optomed PLC

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between QTCOM and Optomed is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Qt Group Oyj and Optomed PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optomed PLC and Qt Group 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 Qt Group Oyj are associated (or correlated) with Optomed PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optomed PLC has no effect on the direction of Qt Group i.e., Qt Group and Optomed PLC go up and down completely randomly.

Pair Corralation between Qt Group and Optomed PLC

Assuming the 90 days trading horizon Qt Group Oyj is expected to under-perform the Optomed PLC. But the stock apears to be less risky and, when comparing its historical volatility, Qt Group Oyj is 1.15 times less risky than Optomed PLC. The stock trades about -0.22 of its potential returns per unit of risk. The Optomed PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  378.00  in Optomed PLC on August 30, 2024 and sell it today you would earn a total of  45.00  from holding Optomed PLC or generate 11.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Qt Group Oyj  vs.  Optomed PLC

 Performance 
       Timeline  
Qt Group Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Qt Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Optomed PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Optomed PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Qt Group and Optomed PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qt Group and Optomed PLC

The main advantage of trading using opposite Qt Group and Optomed PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qt Group position performs unexpectedly, Optomed PLC 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 Optomed PLC will offset losses from the drop in Optomed PLC's long position.
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The idea behind Qt Group Oyj and Optomed PLC 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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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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