Correlation Between IQuest and Kbi Metal

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

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

Diversification Opportunities for IQuest and Kbi Metal

-0.34

Correlation Coefficient

IQuest  Kbi Metal

Very good diversification

The 3 months correlation between IQuest and Kbi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding IQuest Co and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and IQuest 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 IQuest Co are associated (or correlated) with Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of IQuest i.e., IQuest and Kbi Metal go up and down completely randomly.

Pair Corralation between IQuest and Kbi Metal

Assuming the 90 days trading horizon IQuest Co is expected to under-perform the Kbi Metal. But the stock apears to be less risky and, when comparing its historical volatility, IQuest Co is 1.86 times less risky than Kbi Metal. The stock trades about 0.0 of its potential returns per unit of risk. The Kbi Metal Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  148,500  in Kbi Metal Co on October 5, 2024 and sell it today you would earn a total of  54,000  from holding Kbi Metal Co or generate 36.36% return on investment over 90 days.

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

IQuest Co  vs.  Kbi Metal Co

IQuest

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 1 (%) 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.

Kbi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kbi Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IQuest and Kbi Metal

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

The idea behind IQuest Co and Kbi Metal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.