Correlation Between Qantas Airways and Cantaloupe

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

Diversification Opportunities for Qantas Airways and Cantaloupe

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Qantas and Cantaloupe is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Ltd and Cantaloupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantaloupe and Qantas Airways 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 Qantas Airways are associated (or correlated) with Cantaloupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantaloupe has no effect on the direction of Qantas Airways i.e., Qantas Airways and Cantaloupe go up and down completely randomly.

Pair Corralation between Qantas Airways and Cantaloupe

Assuming the 90 days horizon Qantas Airways is expected to generate 1.0 times less return on investment than Cantaloupe. But when comparing it to its historical volatility, Qantas Airways is 2.2 times less risky than Cantaloupe. It trades about 0.17 of its potential returns per unit of risk. Cantaloupe is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  337.00  in Cantaloupe on September 5, 2022 and sell it today you would earn a total of  17.00  from holding Cantaloupe or generate 5.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Qantas Airways Ltd  vs.  Cantaloupe

 Performance (%) 
       Timeline  
Qantas Airways 
Qantas Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Qantas Airways showed solid returns over the last few months and may actually be approaching a breakup point.

Qantas Price Channel

Cantaloupe 
Cantaloupe Performance
0 of 100
Over the last 90 days Cantaloupe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Cantaloupe Price Channel

Qantas Airways and Cantaloupe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qantas Airways and Cantaloupe

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

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