Correlation Between Ensign Energy and Questor Technology

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

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

Diversification Opportunities for Ensign Energy and Questor Technology

0.76

Correlation Coefficient

Ensign Energy  Questor Technology

Poor diversification

The 3 months correlation between Ensign and Questor is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Questor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questor Technology and Ensign Energy 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 Ensign Energy Services are associated (or correlated) with Questor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questor Technology has no effect on the direction of Ensign Energy i.e., Ensign Energy and Questor Technology go up and down completely randomly.

Pair Corralation between Ensign Energy and Questor Technology

Assuming the 90 days trading horizon Ensign Energy Services is expected to under-perform the Questor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ensign Energy Services is 1.77 times less risky than Questor Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Questor Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Questor Technology on December 23, 2024 and sell it today you would lose (4.00) from holding Questor Technology or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Ensign Energy Services  vs.  Questor Technology

Ensign Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ensign Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Questor Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Questor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Questor Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ensign Energy and Questor Technology

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

The idea behind Ensign Energy Services and Questor Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.