Correlation Between CanaQuest Medical and BioQuest Corp

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

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

Diversification Opportunities for CanaQuest Medical and BioQuest Corp

-0.44

Correlation Coefficient

CanaQuest Medical  BioQuest Corp

Very good diversification

The 3 months correlation between CanaQuest and BioQuest is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CanaQuest Medical Corp and BioQuest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioQuest Corp and CanaQuest Medical 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 CanaQuest Medical Corp are associated (or correlated) with BioQuest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioQuest Corp has no effect on the direction of CanaQuest Medical i.e., CanaQuest Medical and BioQuest Corp go up and down completely randomly.

Pair Corralation between CanaQuest Medical and BioQuest Corp

Assuming the 90 days horizon CanaQuest Medical Corp is expected to generate 1.97 times more return on investment than BioQuest Corp. However, CanaQuest Medical is 1.97 times more volatile than BioQuest Corp. It trades about 0.1 of its potential returns per unit of risk. BioQuest Corp is currently generating about 0.14 per unit of risk. If you would invest  3.33  in CanaQuest Medical Corp on October 25, 2024 and sell it today you would earn a total of  0.09  from holding CanaQuest Medical Corp or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

CanaQuest Medical Corp  vs.  BioQuest Corp

CanaQuest Medical Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CanaQuest Medical Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CanaQuest Medical reported solid returns over the last few months and may actually be approaching a breakup point.

BioQuest Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioQuest Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BioQuest Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CanaQuest Medical and BioQuest Corp

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

The idea behind CanaQuest Medical Corp and BioQuest Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.