Correlation Between Kyeryong Construction and IQuest

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

By analyzing existing cross correlation between Kyeryong Construction Industrial and IQuest Co, you can compare the effects of market volatilities on Kyeryong Construction and IQuest 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 Kyeryong Construction with a short position of IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyeryong Construction and IQuest.

Diversification Opportunities for Kyeryong Construction and IQuest

-0.24

Correlation Coefficient

Kyeryong Construction  IQuest

Very good diversification

The 3 months correlation between Kyeryong and IQuest is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kyeryong Construction Industri and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest and Kyeryong Construction 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 Kyeryong Construction Industrial are associated (or correlated) with IQuest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest has no effect on the direction of Kyeryong Construction i.e., Kyeryong Construction and IQuest go up and down completely randomly.

Pair Corralation between Kyeryong Construction and IQuest

Assuming the 90 days trading horizon Kyeryong Construction Industrial is expected to under-perform the IQuest. But the stock apears to be less risky and, when comparing its historical volatility, Kyeryong Construction Industrial is 2.1 times less risky than IQuest. The stock trades about -0.09 of its potential returns per unit of risk. The IQuest Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  216,386  in IQuest Co on October 22, 2024 and sell it today you would earn a total of  26,114  from holding IQuest Co or generate 12.07% return on investment over 90 days.

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

Kyeryong Construction Industri  vs.  IQuest Co

Kyeryong Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyeryong Construction Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

IQuest

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyeryong Construction and IQuest

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

The idea behind Kyeryong Construction Industrial and IQuest Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.