Correlation Between Cameo Communications and Quanta Computer

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

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

Diversification Opportunities for Cameo Communications and Quanta Computer

0.71

Correlation Coefficient

Cameo Communications  Quanta Computer

Poor diversification

The 3 months correlation between Cameo and Quanta is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer and Cameo Communications 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 Cameo Communications are associated (or correlated) with Quanta Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Computer has no effect on the direction of Cameo Communications i.e., Cameo Communications and Quanta Computer go up and down completely randomly.

Pair Corralation between Cameo Communications and Quanta Computer

Assuming the 90 days trading horizon Cameo Communications is expected to generate 1.26 times more return on investment than Quanta Computer. However, Cameo Communications is 1.26 times more volatile than Quanta Computer. It trades about 0.08 of its potential returns per unit of risk. Quanta Computer is currently generating about 0.07 per unit of risk. If you would invest  1,040  in Cameo Communications on August 31, 2024 and sell it today you would earn a total of  130.00  from holding Cameo Communications or generate 12.5% return on investment over 90 days.

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

Cameo Communications  vs.  Quanta Computer

Cameo Communications

Risk-Adjusted Performance

5 of 100

Modest

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

Quanta Computer

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 5 (%) 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 December 2024.

Pair Trading with Cameo Communications and Quanta Computer

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

The idea behind Cameo Communications and Quanta Computer 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.