Correlation Between Queens Road and LS Starrett
Can any of the company-specific risk be diversified away by investing in both Queens Road and LS Starrett 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 Queens Road and LS Starrett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Queens Road Capital and LS Starrett, you can compare the effects of market volatilities on Queens Road and LS Starrett 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 Queens Road with a short position of LS Starrett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and LS Starrett.
Diversification Opportunities for Queens Road and LS Starrett
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Queens and SCX is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and LS Starrett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Starrett and Queens Road 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 Queens Road Capital are associated (or correlated) with LS Starrett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Starrett has no effect on the direction of Queens Road i.e., Queens Road and LS Starrett go up and down completely randomly.
Pair Corralation between Queens Road and LS Starrett
Assuming the 90 days horizon Queens Road is expected to generate 1.5 times less return on investment than LS Starrett. But when comparing it to its historical volatility, Queens Road Capital is 2.92 times less risky than LS Starrett. It trades about 0.13 of its potential returns per unit of risk. LS Starrett is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,350 in LS Starrett on January 26, 2024 and sell it today you would earn a total of 253.00 from holding LS Starrett or generate 18.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Queens Road Capital vs. LS Starrett
Performance |
Timeline |
Queens Road Capital |
LS Starrett |
Queens Road and LS Starrett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Queens Road and LS Starrett
The main advantage of trading using opposite Queens Road and LS Starrett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road position performs unexpectedly, LS Starrett 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 LS Starrett will offset losses from the drop in LS Starrett's long position.Queens Road vs. Starfleet Innotech | Queens Road vs. Flow Capital Corp | Queens Road vs. Blackhawk Growth Corp | Queens Road vs. AGF Management Limited |
LS Starrett vs. Lincoln Electric Holdings | LS Starrett vs. Timken Company | LS Starrett vs. RBC Bearings | LS Starrett vs. Kennametal |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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