Correlation Between LifeQuest World and Eestech

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

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

Diversification Opportunities for LifeQuest World and Eestech

0.57

Correlation Coefficient

LifeQuest World  Eestech

Very weak diversification

The 3 months correlation between LifeQuest and Eestech is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding LifeQuest World and Eestech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eestech and LifeQuest World 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 LifeQuest World are associated (or correlated) with Eestech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eestech has no effect on the direction of LifeQuest World i.e., LifeQuest World and Eestech go up and down completely randomly.

Pair Corralation between LifeQuest World and Eestech

Given the investment horizon of 90 days LifeQuest World is expected to generate 2.37 times more return on investment than Eestech. However, LifeQuest World is 2.37 times more volatile than Eestech. It trades about 0.11 of its potential returns per unit of risk. Eestech is currently generating about -0.12 per unit of risk. If you would invest  1.10  in LifeQuest World on September 3, 2024 and sell it today you would lose (0.46) from holding LifeQuest World or give up 41.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

LifeQuest World  vs.  Eestech

LifeQuest World

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LifeQuest World are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, LifeQuest World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eestech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eestech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with LifeQuest World and Eestech

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

The idea behind LifeQuest World and Eestech 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.