Correlation Between Datavan International and Quanta Storage

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

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

Diversification Opportunities for Datavan International and Quanta Storage

0.42

Correlation Coefficient

Datavan International  Quanta Storage

Very weak diversification

The 3 months correlation between Datavan and Quanta is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Datavan International and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage and Datavan International 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 Datavan International are associated (or correlated) with Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of Datavan International i.e., Datavan International and Quanta Storage go up and down completely randomly.

Pair Corralation between Datavan International and Quanta Storage

Assuming the 90 days trading horizon Datavan International is expected to generate 1.45 times more return on investment than Quanta Storage. However, Datavan International is 1.45 times more volatile than Quanta Storage. It trades about 0.07 of its potential returns per unit of risk. Quanta Storage is currently generating about -0.01 per unit of risk. If you would invest  1,740  in Datavan International on September 2, 2024 and sell it today you would earn a total of  210.00  from holding Datavan International or generate 12.07% return on investment over 90 days.

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

Datavan International  vs.  Quanta Storage

Datavan International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Datavan International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Datavan International showed solid returns over the last few months and may actually be approaching a breakup point.

Quanta Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quanta Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Quanta Storage 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 Datavan International and Quanta Storage

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

The idea behind Datavan International and Quanta Storage 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.