Correlation Between Hsin Kuang and Quanta Computer

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

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

Diversification Opportunities for Hsin Kuang and Quanta Computer

0.09

Correlation Coefficient

Hsin Kuang  Quanta Computer

Significant diversification

The 3 months correlation between Hsin and Quanta is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer and Hsin Kuang 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 Hsin Kuang Steel 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 Hsin Kuang i.e., Hsin Kuang and Quanta Computer go up and down completely randomly.

Pair Corralation between Hsin Kuang and Quanta Computer

Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.66 times more return on investment than Quanta Computer. However, Hsin Kuang Steel is 1.52 times less risky than Quanta Computer. It trades about -0.01 of its potential returns per unit of risk. Quanta Computer is currently generating about -0.13 per unit of risk. If you would invest  6,180  in Hsin Kuang Steel on February 5, 2024 and sell it today you would lose (50.00) from holding Hsin Kuang Steel or give up 0.81% of portfolio value over 90 days.

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

Hsin Kuang Steel  vs.  Quanta Computer

Hsin Kuang Steel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hsin Kuang Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hsin Kuang may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Quanta Computer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Quanta Computer 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 Hsin Kuang and Quanta Computer

The main advantage of trading using opposite Hsin Kuang and Quanta Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang 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 Hsin Kuang Steel 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.