Correlation Between Highwood Asset and Questor Technology

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

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

Diversification Opportunities for Highwood Asset and Questor Technology

-0.52

Correlation Coefficient

Highwood Asset  Questor Technology

Excellent diversification

The 3 months correlation between Highwood and Questor is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and Questor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questor Technology and Highwood Asset 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 Highwood Asset Management 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 Highwood Asset i.e., Highwood Asset and Questor Technology go up and down completely randomly.

Pair Corralation between Highwood Asset and Questor Technology

Assuming the 90 days horizon Highwood Asset Management is expected to generate 0.75 times more return on investment than Questor Technology. However, Highwood Asset Management is 1.32 times less risky than Questor Technology. It trades about 0.02 of its potential returns per unit of risk. Questor Technology is currently generating about -0.04 per unit of risk. If you would invest  575.00  in Highwood Asset Management on September 12, 2024 and sell it today you would earn a total of  10.00  from holding Highwood Asset Management or generate 1.74% return on investment over 90 days.

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

Highwood Asset Management  vs.  Questor Technology

Highwood Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Questor Technology

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Highwood Asset and Questor Technology

The main advantage of trading using opposite Highwood Asset and Questor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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 Highwood Asset Management 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.