Correlation Between Thrace Plastics and Quest Holdings

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

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

Diversification Opportunities for Thrace Plastics and Quest Holdings

0.5

Correlation Coefficient

Thrace Plastics  Quest Holdings

Very weak diversification

The 3 months correlation between Thrace and Quest is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Thrace Plastics Holding and Quest Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quest Holdings SA and Thrace Plastics 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 Thrace Plastics Holding are associated (or correlated) with Quest Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quest Holdings SA has no effect on the direction of Thrace Plastics i.e., Thrace Plastics and Quest Holdings go up and down completely randomly.

Pair Corralation between Thrace Plastics and Quest Holdings

Assuming the 90 days trading horizon Thrace Plastics Holding is expected to generate 1.14 times more return on investment than Quest Holdings. However, Thrace Plastics is 1.14 times more volatile than Quest Holdings SA. It trades about 0.13 of its potential returns per unit of risk. Quest Holdings SA is currently generating about 0.14 per unit of risk. If you would invest  370.00  in Thrace Plastics Holding on October 26, 2024 and sell it today you would earn a total of  38.00  from holding Thrace Plastics Holding or generate 10.27% return on investment over 90 days.

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

Thrace Plastics Holding  vs.  Quest Holdings SA

Thrace Plastics Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrace Plastics Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Thrace Plastics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quest Holdings SA

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Thrace Plastics and Quest Holdings

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

The idea behind Thrace Plastics Holding and Quest Holdings SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..