Correlation Between Dawson Geophysical and QS Energy

Can any of the company-specific risk be diversified away by investing in both Dawson Geophysical and QS Energy 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 Dawson Geophysical and QS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dawson Geophysical and QS Energy, you can compare the effects of market volatilities on Dawson Geophysical and QS Energy 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 Dawson Geophysical with a short position of QS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawson Geophysical and QS Energy.

Diversification Opportunities for Dawson Geophysical and QS Energy

-0.09

Correlation Coefficient

Dawson Geophysical  QS Energy

Good diversification

The 3 months correlation between Dawson and QSEP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and QS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QS Energy and Dawson Geophysical 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 Dawson Geophysical are associated (or correlated) with QS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QS Energy has no effect on the direction of Dawson Geophysical i.e., Dawson Geophysical and QS Energy go up and down completely randomly.

Pair Corralation between Dawson Geophysical and QS Energy

Given the investment horizon of 90 days Dawson Geophysical is expected to generate 0.68 times more return on investment than QS Energy. However, Dawson Geophysical is 1.48 times less risky than QS Energy. It trades about 0.21 of its potential returns per unit of risk. QS Energy is currently generating about 0.04 per unit of risk. If you would invest  119.00  in Dawson Geophysical on January 26, 2024 and sell it today you would earn a total of  35.00  from holding Dawson Geophysical or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dawson Geophysical  vs.  QS Energy

Dawson Geophysical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Dawson Geophysical displayed solid returns over the last few months and may actually be approaching a breakup point.

QS Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QS Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Dawson Geophysical and QS Energy

The main advantage of trading using opposite Dawson Geophysical and QS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawson Geophysical position performs unexpectedly, QS Energy 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 QS Energy will offset losses from the drop in QS Energy's long position.

The idea behind Dawson Geophysical and QS Energy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.