Correlation Between IBASE Technology and Quanta Computer

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

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

Diversification Opportunities for IBASE Technology and Quanta Computer

0.27

Correlation Coefficient

IBASE Technology  Quanta Computer

Modest diversification

The 3 months correlation between IBASE and Quanta is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding IBASE Technology and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer and IBASE Technology 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 IBASE Technology 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 IBASE Technology i.e., IBASE Technology and Quanta Computer go up and down completely randomly.

Pair Corralation between IBASE Technology and Quanta Computer

Assuming the 90 days trading horizon IBASE Technology is expected to under-perform the Quanta Computer. But the stock apears to be less risky and, when comparing its historical volatility, IBASE Technology is 1.86 times less risky than Quanta Computer. The stock trades about -0.02 of its potential returns per unit of risk. The Quanta Computer is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  26,400  in Quanta Computer on September 30, 2024 and sell it today you would earn a total of  2,700  from holding Quanta Computer or generate 10.23% return on investment over 90 days.

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

IBASE Technology  vs.  Quanta Computer

IBASE Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Quanta Computer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 7 (%) 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.

Pair Trading with IBASE Technology and Quanta Computer

The main advantage of trading using opposite IBASE Technology and Quanta Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBASE Technology 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 IBASE Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..