Correlation Between Quest Holdings and Motor Oil

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

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

Diversification Opportunities for Quest Holdings and Motor Oil

0.57

Correlation Coefficient

Quest Holdings  Motor Oil

Very weak diversification

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

Pair Corralation between Quest Holdings and Motor Oil

Assuming the 90 days trading horizon Quest Holdings is expected to generate 4.75 times less return on investment than Motor Oil. In addition to that, Quest Holdings is 1.01 times more volatile than Motor Oil Corinth. It trades about 0.03 of its total potential returns per unit of risk. Motor Oil Corinth is currently generating about 0.16 per unit of volatility. If you would invest  2,024  in Motor Oil Corinth on December 30, 2024 and sell it today you would earn a total of  264.00  from holding Motor Oil Corinth or generate 13.04% return on investment over 90 days.

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

Quest Holdings SA  vs.  Motor Oil Corinth

Quest Holdings SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quest Holdings SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Quest Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Motor Oil Corinth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Motor Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quest Holdings and Motor Oil

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

The idea behind Quest Holdings SA and Motor Oil Corinth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.