Correlation Between Current Water and Quest Products

Can any of the company-specific risk be diversified away by investing in both Current Water and Quest Products 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 Quest Products 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 Quest Products Corp, you can compare the effects of market volatilities on Current Water and Quest Products 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 Quest Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Current Water and Quest Products.

Diversification Opportunities for Current Water and Quest Products

0.65

Correlation Coefficient

Current Water  Quest Products

Poor diversification

The 3 months correlation between Current and Quest is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Current Water Technologies and Quest Products Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quest Products Corp 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 Quest Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quest Products Corp has no effect on the direction of Current Water i.e., Current Water and Quest Products go up and down completely randomly.

Pair Corralation between Current Water and Quest Products

Assuming the 90 days horizon Current Water is expected to generate 1.37 times less return on investment than Quest Products. But when comparing it to its historical volatility, Current Water Technologies is 5.47 times less risky than Quest Products. It trades about 0.08 of its potential returns per unit of risk. Quest Products Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Quest Products Corp on September 16, 2025 and sell it today you would lose (20.00) from holding Quest Products Corp or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Current Water Technologies  vs.  Quest Products Corp

Current Water Techno

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Current Water Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Current Water reported solid returns over the last few months and may actually be approaching a breakup point.

Quest Products Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quest Products Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Quest Products exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Current Water and Quest Products

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

The idea behind Current Water Technologies and Quest Products Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.