Correlation Between IQuest and CU Medical

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

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

Diversification Opportunities for IQuest and CU Medical

-0.49

Correlation Coefficient

IQuest  CU Medical

Very good diversification

The 3 months correlation between IQuest and 115480 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding IQuest Co and CU Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CU Medical Systems 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 CU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CU Medical Systems has no effect on the direction of IQuest i.e., IQuest and CU Medical go up and down completely randomly.

Pair Corralation between IQuest and CU Medical

Assuming the 90 days trading horizon IQuest Co is expected to generate 1.34 times more return on investment than CU Medical. However, IQuest is 1.34 times more volatile than CU Medical Systems. It trades about -0.02 of its potential returns per unit of risk. CU Medical Systems is currently generating about -0.07 per unit of risk. If you would invest  336,563  in IQuest Co on October 4, 2024 and sell it today you would lose (107,563) from holding IQuest Co or give up 31.96% of portfolio value over 90 days.

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

IQuest Co  vs.  CU Medical Systems

IQuest

Risk-Adjusted Performance

2 of 100

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.

CU Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CU Medical Systems 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 CU Medical

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

The idea behind IQuest Co and CU Medical Systems 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.