Correlation Between Laurentian Bank and Questor Technology

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

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

Diversification Opportunities for Laurentian Bank and Questor Technology

-0.25

Correlation Coefficient

Laurentian Bank  Questor Technology

Very good diversification

The 3 months correlation between Laurentian and Questor is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Questor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questor Technology and Laurentian Bank 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 Laurentian Bank 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 Laurentian Bank i.e., Laurentian Bank and Questor Technology go up and down completely randomly.

Pair Corralation between Laurentian Bank and Questor Technology

Assuming the 90 days horizon Laurentian Bank is expected to generate 0.5 times more return on investment than Questor Technology. However, Laurentian Bank is 1.98 times less risky than Questor Technology. It trades about 0.0 of its potential returns per unit of risk. Questor Technology is currently generating about -0.03 per unit of risk. If you would invest  3,123  in Laurentian Bank on October 24, 2024 and sell it today you would lose (245.00) from holding Laurentian Bank or give up 7.85% of portfolio value over 90 days.

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

Laurentian Bank  vs.  Questor Technology

Laurentian Bank

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laurentian Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Questor Technology

Risk-Adjusted Performance

0 of 100

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 Laurentian Bank and Questor Technology

The main advantage of trading using opposite Laurentian Bank and Questor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank 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 Laurentian Bank 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.