Correlation Between Current Water and Questor Technology

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

By analyzing existing cross correlation between Current Water Technologies and Questor Technology, you can compare the effects of market volatilities on Current Water and Questor Technology 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 Current Water with a short position of Questor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Current Water and Questor Technology.

Diversification Opportunities for Current Water and Questor Technology

0.36

Correlation Coefficient

Current Water  Questor Technology

Weak diversification

The 3 months correlation between Current and Questor is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Current Water Technologies and Questor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questor Technology and Current Water 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 Current Water Technologies are associated (or correlated) with Questor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questor Technology has no effect on the direction of Current Water i.e., Current Water and Questor Technology go up and down completely randomly.

Pair Corralation between Current Water and Questor Technology

Assuming the 90 days trading horizon Current Water Technologies is expected to generate 1.54 times more return on investment than Questor Technology. However, Current Water is 1.54 times more volatile than Questor Technology. It trades about -0.03 of its potential returns per unit of risk. Questor Technology is currently generating about -0.15 per unit of risk. If you would invest  3.00  in Current Water Technologies on December 2, 2024 and sell it today you would lose (0.50) from holding Current Water Technologies or give up 16.67% of portfolio value over 90 days.

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

Current Water Technologies  vs.  Questor Technology

Current Water Techno

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Current Water Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Current Water showed solid returns over the last few months and may actually be approaching a breakup point.

Questor Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Questor Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Questor Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Current Water and Questor Technology

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

The idea behind Current Water Technologies and Questor Technology 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.