Correlation Between Quanta Computer and Her Chee

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

By analyzing existing cross correlation between Quanta Computer and Her Chee Industrial, you can compare the effects of market volatilities on Quanta Computer and Her Chee 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 Her Chee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and Her Chee.

Diversification Opportunities for Quanta Computer and Her Chee

0.58

Correlation Coefficient

Quanta Computer  Her Chee

Very weak diversification

The 3 months correlation between Quanta and Her is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and Her Chee Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Her Chee Industrial 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 Her Chee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Her Chee Industrial has no effect on the direction of Quanta Computer i.e., Quanta Computer and Her Chee go up and down completely randomly.

Pair Corralation between Quanta Computer and Her Chee

Assuming the 90 days trading horizon Quanta Computer is expected to generate 5.6 times less return on investment than Her Chee. But when comparing it to its historical volatility, Quanta Computer is 1.94 times less risky than Her Chee. It trades about 0.13 of its potential returns per unit of risk. Her Chee Industrial is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  5,250  in Her Chee Industrial on September 12, 2024 and sell it today you would earn a total of  7,100  from holding Her Chee Industrial or generate 135.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Quanta Computer  vs.  Her Chee Industrial

Quanta Computer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quanta Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Her Chee Industrial

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Her Chee Industrial are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Her Chee showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quanta Computer and Her Chee

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

The idea behind Quanta Computer and Her Chee Industrial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.