Correlation Between Insas Bhd and QL Resources

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

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

Diversification Opportunities for Insas Bhd and QL Resources

-0.5

Correlation Coefficient

Insas Bhd  QL Resources

Very good diversification

The 3 months correlation between Insas and 7084 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Insas Bhd and QL Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QL Resources Bhd and Insas Bhd 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 Insas Bhd are associated (or correlated) with QL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QL Resources Bhd has no effect on the direction of Insas Bhd i.e., Insas Bhd and QL Resources go up and down completely randomly.

Pair Corralation between Insas Bhd and QL Resources

Assuming the 90 days trading horizon Insas Bhd is expected to under-perform the QL Resources. In addition to that, Insas Bhd is 1.14 times more volatile than QL Resources Bhd. It trades about -0.03 of its total potential returns per unit of risk. QL Resources Bhd is currently generating about -0.01 per unit of volatility. If you would invest  473.00  in QL Resources Bhd on December 28, 2024 and sell it today you would lose (5.00) from holding QL Resources Bhd or give up 1.06% of portfolio value over 90 days.

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

Insas Bhd  vs.  QL Resources Bhd

Insas Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Insas Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

QL Resources Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days QL Resources Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, QL Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Insas Bhd and QL Resources

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

The idea behind Insas Bhd and QL Resources Bhd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.