Correlation Between Wang Lee and Quanta Services

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

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

Diversification Opportunities for Wang Lee and Quanta Services

0.77

Correlation Coefficient

Wang Lee  Quanta Services

Poor diversification

The 3 months correlation between Wang and Quanta is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Wang Lee 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 Wang Lee Group, are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Wang Lee i.e., Wang Lee and Quanta Services go up and down completely randomly.

Pair Corralation between Wang Lee and Quanta Services

Given the investment horizon of 90 days Wang Lee Group, is expected to under-perform the Quanta Services. In addition to that, Wang Lee is 7.64 times more volatile than Quanta Services. It trades about -0.19 of its total potential returns per unit of risk. Quanta Services is currently generating about -0.1 per unit of volatility. If you would invest  34,192  in Quanta Services on September 23, 2024 and sell it today you would lose (1,351) from holding Quanta Services or give up 3.95% of portfolio value over 90 days.

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

Wang Lee Group,  vs.  Quanta Services

Wang Lee Group,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Quanta Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Quanta Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wang Lee and Quanta Services

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

The idea behind Wang Lee Group, and Quanta Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.