Correlation Between Quest For and Brederode

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

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

Diversification Opportunities for Quest For and Brederode

0.63

Correlation Coefficient

Quest For  Brederode

Poor diversification

The 3 months correlation between Quest and Brederode is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Quest For Growth and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and Quest For 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 Quest For Growth are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Quest For i.e., Quest For and Brederode go up and down completely randomly.

Pair Corralation between Quest For and Brederode

Assuming the 90 days trading horizon Quest For Growth is expected to generate 1.23 times more return on investment than Brederode. However, Quest For is 1.23 times more volatile than Brederode SA. It trades about 0.14 of its potential returns per unit of risk. Brederode SA is currently generating about 0.15 per unit of risk. If you would invest  388.00  in Quest For Growth on December 2, 2024 and sell it today you would earn a total of  41.00  from holding Quest For Growth or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Quest For Growth  vs.  Brederode SA

Quest For Growth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quest For Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Quest For may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brederode SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brederode SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Brederode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Quest For and Brederode

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

The idea behind Quest For Growth and Brederode 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..