Correlation Between Quanta Computer and MedFirst Healthcare

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

By analyzing existing cross correlation between Quanta Computer and MedFirst Healthcare Services, you can compare the effects of market volatilities on Quanta Computer and MedFirst Healthcare 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 Quanta Computer with a short position of MedFirst Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and MedFirst Healthcare.

Diversification Opportunities for Quanta Computer and MedFirst Healthcare

-0.6

Correlation Coefficient

Quanta Computer  MedFirst Healthcare

Excellent diversification

The 3 months correlation between Quanta and MedFirst is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare and Quanta Computer 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 Quanta Computer are associated (or correlated) with MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of Quanta Computer i.e., Quanta Computer and MedFirst Healthcare go up and down completely randomly.

Pair Corralation between Quanta Computer and MedFirst Healthcare

Assuming the 90 days trading horizon Quanta Computer is expected to generate 5.52 times more return on investment than MedFirst Healthcare. However, Quanta Computer is 5.52 times more volatile than MedFirst Healthcare Services. It trades about 0.06 of its potential returns per unit of risk. MedFirst Healthcare Services is currently generating about -0.13 per unit of risk. If you would invest  27,200  in Quanta Computer on September 3, 2024 and sell it today you would earn a total of  1,900  from holding Quanta Computer or generate 6.99% return on investment over 90 days.

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

Quanta Computer  vs.  MedFirst Healthcare Services

Quanta Computer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quanta Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MedFirst Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedFirst Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MedFirst Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Quanta Computer and MedFirst Healthcare

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

The idea behind Quanta Computer and MedFirst Healthcare Services 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.