Correlation Between Advanced Braking and Queste Communications

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

By analyzing existing cross correlation between Advanced Braking Technology and Queste Communications, you can compare the effects of market volatilities on Advanced Braking and Queste Communications 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 Advanced Braking with a short position of Queste Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Queste Communications.

Diversification Opportunities for Advanced Braking and Queste Communications

-0.11

Correlation Coefficient

Advanced Braking  Queste Communications

Good diversification

The 3 months correlation between Advanced and Queste is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Queste Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queste Communications and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Queste Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queste Communications has no effect on the direction of Advanced Braking i.e., Advanced Braking and Queste Communications go up and down completely randomly.

Pair Corralation between Advanced Braking and Queste Communications

Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 1.42 times more return on investment than Queste Communications. However, Advanced Braking is 1.42 times more volatile than Queste Communications. It trades about -0.1 of its potential returns per unit of risk. Queste Communications is currently generating about -0.23 per unit of risk. If you would invest  8.70  in Advanced Braking Technology on October 7, 2024 and sell it today you would lose (0.50) from holding Advanced Braking Technology or give up 5.75% of portfolio value over 90 days.

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

Advanced Braking Technology  vs.  Queste Communications

Advanced Braking Tec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Braking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Queste Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queste Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Advanced Braking and Queste Communications

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

The idea behind Advanced Braking Technology and Queste Communications 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.