Correlation Between QST International and Hota Industrial

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

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

Diversification Opportunities for QST International and Hota Industrial

-0.31

Correlation Coefficient

QST International  Hota Industrial

Very good diversification

The 3 months correlation between QST and Hota is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding QST International and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and QST 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 QST International are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of QST International i.e., QST International and Hota Industrial go up and down completely randomly.

Pair Corralation between QST International and Hota Industrial

Assuming the 90 days trading horizon QST International is expected to generate 16.31 times more return on investment than Hota Industrial. However, QST International is 16.31 times more volatile than Hota Industrial Mfg. It trades about 0.06 of its potential returns per unit of risk. Hota Industrial Mfg is currently generating about 0.02 per unit of risk. If you would invest  5,322  in QST International on September 4, 2024 and sell it today you would earn a total of  1,128  from holding QST International or generate 21.2% return on investment over 90 days.

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

QST International  vs.  Hota Industrial Mfg

QST International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hota Industrial Mfg

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with QST International and Hota Industrial

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

The idea behind QST International and Hota Industrial Mfg 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..