Correlation Between Queste Communications and Capitol Health

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

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

Diversification Opportunities for Queste Communications and Capitol Health

-0.48

Correlation Coefficient

Queste Communications  Capitol Health

Very good diversification

The 3 months correlation between Queste and Capitol is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Queste Communications and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health and Queste Communications 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 Queste Communications are associated (or correlated) with Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of Queste Communications i.e., Queste Communications and Capitol Health go up and down completely randomly.

Pair Corralation between Queste Communications and Capitol Health

Assuming the 90 days trading horizon Queste Communications is expected to under-perform the Capitol Health. But the stock apears to be less risky and, when comparing its historical volatility, Queste Communications is 2.21 times less risky than Capitol Health. The stock trades about -0.13 of its potential returns per unit of risk. The Capitol Health is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Capitol Health on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Capitol Health or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Queste Communications  vs.  Capitol Health

Queste Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queste Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Capitol Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Queste Communications and Capitol Health

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

The idea behind Queste Communications and Capitol Health 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.