Correlation Between SBI Investment and IQuest

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

Diversification Opportunities for SBI Investment and IQuest

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SBI and IQuest is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest and SBI Investment 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 SBI Investment KOREA 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 SBI Investment i.e., SBI Investment and IQuest go up and down completely randomly.

Pair Corralation between SBI Investment and IQuest

Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 0.97 times more return on investment than IQuest. However, SBI Investment KOREA is 1.04 times less risky than IQuest. It trades about -0.01 of its potential returns per unit of risk. IQuest Co is currently generating about -0.02 per unit of risk. If you would invest  99,700  in SBI Investment KOREA on October 4, 2024 and sell it today you would lose (23,600) from holding SBI Investment KOREA or give up 23.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SBI Investment KOREA  vs.  IQuest Co

 Performance 
       Timeline  
SBI Investment KOREA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.
IQuest 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IQuest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SBI Investment and IQuest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SBI Investment and IQuest

The main advantage of trading using opposite SBI Investment and IQuest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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 SBI Investment KOREA 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.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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