Correlation Between Pro Dex and Quest Resource

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

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

Diversification Opportunities for Pro Dex and Quest Resource

-0.82

Correlation Coefficient

Pro Dex  Quest Resource

Pay attention - limited upside

The 3 months correlation between Pro and Quest is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pro Dex and Quest Resource Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quest Resource Holding and Pro Dex 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 Pro Dex are associated (or correlated) with Quest Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quest Resource Holding has no effect on the direction of Pro Dex i.e., Pro Dex and Quest Resource go up and down completely randomly.

Pair Corralation between Pro Dex and Quest Resource

Given the investment horizon of 90 days Pro Dex is expected to generate 1.17 times more return on investment than Quest Resource. However, Pro Dex is 1.17 times more volatile than Quest Resource Holding. It trades about 0.08 of its potential returns per unit of risk. Quest Resource Holding is currently generating about 0.02 per unit of risk. If you would invest  1,713  in Pro Dex on October 3, 2024 and sell it today you would earn a total of  2,962  from holding Pro Dex or generate 172.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Pro Dex  vs.  Quest Resource Holding

Pro Dex

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Quest Resource Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quest Resource Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pro Dex and Quest Resource

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

The idea behind Pro Dex and Quest Resource Holding 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.