Correlation Between Jinro Distillers and IQuest

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

By analyzing existing cross correlation between Jinro Distillers Co and IQuest Co, you can compare the effects of market volatilities on Jinro Distillers and IQuest 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 Jinro Distillers with a short position of IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and IQuest.

Diversification Opportunities for Jinro Distillers and IQuest

-0.42

Correlation Coefficient

Jinro Distillers  IQuest

Very good diversification

The 3 months correlation between Jinro and IQuest is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with IQuest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and IQuest go up and down completely randomly.

Pair Corralation between Jinro Distillers and IQuest

Assuming the 90 days trading horizon Jinro Distillers Co is expected to under-perform the IQuest. But the stock apears to be less risky and, when comparing its historical volatility, Jinro Distillers Co is 3.31 times less risky than IQuest. The stock trades about -0.24 of its potential returns per unit of risk. The IQuest Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  223,000  in IQuest Co on September 5, 2024 and sell it today you would earn a total of  19,500  from holding IQuest Co or generate 8.74% return on investment over 90 days.

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

Jinro Distillers Co  vs.  IQuest Co

Jinro Distillers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinro Distillers Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jinro Distillers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IQuest

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinro Distillers and IQuest

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

The idea behind Jinro Distillers Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.