Correlation Between Lindeman Asia and IQuest Co

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Can any of the company-specific risk be diversified away by investing in both Lindeman Asia and IQuest Co 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 Lindeman Asia and IQuest Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and IQuest Co, you can compare the effects of market volatilities on Lindeman Asia and IQuest Co 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 Lindeman Asia with a short position of IQuest Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and IQuest Co.

Diversification Opportunities for Lindeman Asia and IQuest Co

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lindeman and IQuest is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest Co and Lindeman Asia 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 Lindeman Asia Investment are associated (or correlated) with IQuest Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest Co has no effect on the direction of Lindeman Asia i.e., Lindeman Asia and IQuest Co go up and down completely randomly.

Pair Corralation between Lindeman Asia and IQuest Co

Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the IQuest Co. But the stock apears to be less risky and, when comparing its historical volatility, Lindeman Asia Investment is 1.11 times less risky than IQuest Co. The stock trades about -0.24 of its potential returns per unit of risk. The IQuest Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  235,000  in IQuest Co on September 12, 2024 and sell it today you would lose (9,500) from holding IQuest Co or give up 4.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lindeman Asia Investment  vs.  IQuest Co

 Performance 
       Timeline  
Lindeman Asia Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lindeman Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
IQuest Co 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lindeman Asia and IQuest Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lindeman Asia and IQuest Co

The main advantage of trading using opposite Lindeman Asia and IQuest Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia position performs unexpectedly, IQuest Co 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 IQuest Co will offset losses from the drop in IQuest Co's long position.
The idea behind Lindeman Asia Investment and IQuest Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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