Correlation Between QST International and Strong H

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

By analyzing existing cross correlation between QST International and Strong H Machinery, you can compare the effects of market volatilities on QST International and Strong H 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 Strong H. Check out your portfolio center. Please also check ongoing floating volatility patterns of QST International and Strong H.

Diversification Opportunities for QST International and Strong H

-0.63

Correlation Coefficient

QST International  Strong H

Excellent diversification

The 3 months correlation between QST and Strong is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding QST International and Strong H Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strong H Machinery 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 Strong H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strong H Machinery has no effect on the direction of QST International i.e., QST International and Strong H go up and down completely randomly.

Pair Corralation between QST International and Strong H

Assuming the 90 days trading horizon QST International is expected to under-perform the Strong H. In addition to that, QST International is 1.03 times more volatile than Strong H Machinery. It trades about -0.06 of its total potential returns per unit of risk. Strong H Machinery is currently generating about 0.06 per unit of volatility. If you would invest  3,300  in Strong H Machinery on September 3, 2024 and sell it today you would earn a total of  120.00  from holding Strong H Machinery or generate 3.64% return on investment over 90 days.

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

QST International  vs.  Strong H Machinery

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.

Strong H Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Strong H 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 QST International and Strong H

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

The idea behind QST International and Strong H Machinery 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.