Correlation Between Link Reservations and CanaQuest Medical

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

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

Diversification Opportunities for Link Reservations and CanaQuest Medical

0.54

Correlation Coefficient

Link Reservations  CanaQuest Medical

Very weak diversification

The 3 months correlation between Link and CanaQuest is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and CanaQuest Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanaQuest Medical Corp and Link Reservations 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 Link Reservations are associated (or correlated) with CanaQuest Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanaQuest Medical Corp has no effect on the direction of Link Reservations i.e., Link Reservations and CanaQuest Medical go up and down completely randomly.

Pair Corralation between Link Reservations and CanaQuest Medical

Given the investment horizon of 90 days Link Reservations is expected to generate 1.54 times more return on investment than CanaQuest Medical. However, Link Reservations is 1.54 times more volatile than CanaQuest Medical Corp. It trades about 0.04 of its potential returns per unit of risk. CanaQuest Medical Corp is currently generating about 0.01 per unit of risk. If you would invest  0.20  in Link Reservations on September 4, 2024 and sell it today you would lose (0.10) from holding Link Reservations or give up 50.0% of portfolio value over 90 days.

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

Link Reservations  vs.  CanaQuest Medical Corp

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

CanaQuest Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CanaQuest Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, CanaQuest Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Link Reservations and CanaQuest Medical

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

The idea behind Link Reservations and CanaQuest Medical 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.