Correlation Between IQuest and Korea Real

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

By analyzing existing cross correlation between IQuest Co and Korea Real Estate, you can compare the effects of market volatilities on IQuest and Korea Real 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 Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQuest and Korea Real.

Diversification Opportunities for IQuest and Korea Real

0.62

Correlation Coefficient

IQuest  Korea Real

Poor diversification

The 3 months correlation between IQuest and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IQuest Co and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate 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 Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of IQuest i.e., IQuest and Korea Real go up and down completely randomly.

Pair Corralation between IQuest and Korea Real

Assuming the 90 days trading horizon IQuest Co is expected to generate 3.29 times more return on investment than Korea Real. However, IQuest is 3.29 times more volatile than Korea Real Estate. It trades about 0.07 of its potential returns per unit of risk. Korea Real Estate is currently generating about 0.12 per unit of risk. If you would invest  232,542  in IQuest Co on November 29, 2024 and sell it today you would earn a total of  18,458  from holding IQuest Co or generate 7.94% return on investment over 90 days.

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

IQuest Co  vs.  Korea Real Estate

IQuest

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Korea Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IQuest and Korea Real

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

The idea behind IQuest Co and Korea Real Estate 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.