Correlation Between SOFTWARE MANSION and Quantum Software

Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION and Quantum Software 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 SOFTWARE MANSION and Quantum Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Quantum Software SA, you can compare the effects of market volatilities on SOFTWARE MANSION and Quantum Software 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 SOFTWARE MANSION with a short position of Quantum Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Quantum Software.

Diversification Opportunities for SOFTWARE MANSION and Quantum Software

0.67

Correlation Coefficient

SOFTWARE MANSION  Quantum Software

Poor diversification

The 3 months correlation between SOFTWARE and Quantum is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Quantum Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Software and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Quantum Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Software has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Quantum Software go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Quantum Software

Assuming the 90 days trading horizon SOFTWARE MANSION is expected to generate 1.56 times less return on investment than Quantum Software. But when comparing it to its historical volatility, SOFTWARE MANSION SPOLKA is 1.9 times less risky than Quantum Software. It trades about 0.21 of its potential returns per unit of risk. Quantum Software SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,760  in Quantum Software SA on April 24, 2025 and sell it today you would earn a total of  1,040  from holding Quantum Software SA or generate 59.09% return on investment over 90 days.

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

SOFTWARE MANSION SPOLKA  vs.  Quantum Software SA

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTWARE MANSION SPOLKA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SOFTWARE MANSION reported solid returns over the last few months and may actually be approaching a breakup point.

Quantum Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Software SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Quantum Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOFTWARE MANSION and Quantum Software

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

The idea behind SOFTWARE MANSION SPOLKA and Quantum Software SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.