Correlation Between Lian Hwa and Quanta Storage
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Quanta Storage 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 Lian Hwa and Quanta Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Quanta Storage, you can compare the effects of market volatilities on Lian Hwa and Quanta Storage 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 Lian Hwa with a short position of Quanta Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Quanta Storage.
Diversification Opportunities for Lian Hwa and Quanta Storage
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lian and Quanta is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage and Lian Hwa 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 Lian Hwa Foods are associated (or correlated) with Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of Lian Hwa i.e., Lian Hwa and Quanta Storage go up and down completely randomly.
Pair Corralation between Lian Hwa and Quanta Storage
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.72 times more return on investment than Quanta Storage. However, Lian Hwa Foods is 1.38 times less risky than Quanta Storage. It trades about 0.22 of its potential returns per unit of risk. Quanta Storage is currently generating about -0.09 per unit of risk. If you would invest 11,250 in Lian Hwa Foods on August 31, 2024 and sell it today you would earn a total of 750.00 from holding Lian Hwa Foods or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Quanta Storage
Performance |
| Timeline |
| Lian Hwa Foods |
| Quanta Storage |
Lian Hwa and Quanta Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Quanta Storage
The main advantage of trading using opposite Lian Hwa and Quanta Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Quanta Storage 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 Storage will offset losses from the drop in Quanta Storage's long position.| Lian Hwa vs. Taisun Enterprise Co | Lian Hwa vs. De Licacy Industrial | Lian Hwa vs. Wisher Industrial Co | Lian Hwa vs. Tainan Enterprises Co |
| Quanta Storage vs. Qisda Corp | Quanta Storage vs. Quanta Computer | Quanta Storage vs. Coretronic | Quanta Storage vs. Wistron Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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